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SELECTIONS 


ILLUSTRATING 


ECONOMIC  HISTORY 

1  w 


SINCE  THE  SEVEN  YEARS’  WAR 


COMPILED  BY 

■"v 

BENJAMIN  RAND,  Ph.D. 

EDITOR  OF  “  LIFE,  LETTERS  AND  PHILOSOPHICAL  REGIMEN  OF  THE  THIRD  EARL 
OF  SHAFTESBURY,”  “BIBLIOGRAPHY  OF  PHILOSOPHY,”  ETC.,  ETC. 


jFourtf)  IStutfon 

REVISED  AND  ENLARGED 


Nefo  fork 

THE  MACMILLAN  COMPANY 

LONDON:  MACMILLAN  &  CO.,  Ltd. 

1903 


All  rights  reserved 


Jt 


Copyright,  1892 , 1895, 

By  Benjamin  Rand. 


i 


UNIVERSITY  PRESS  •  JOHN  WILSON 
AND  SON  •  CAMBRIDGE,  U.  S.  A. 


PREFATORY  NOTE 


TO  THE  SECOND  EDITION. 


HTHE  first  edition  of  these  selections  was  published 
as  a  text-book  of  required  reading  to  accom¬ 
pany  a  course  of  lectures  on  economic  history  given 
at  Harvard  College.  It  was  also  adopted  for  a 
similar  purpose  by  other  American  Universities.  A 
continued  demand  for  the  work  has  led  to  the 

v 

preparation  of  the  present  revised  and  enlarged 
edition.  The  design  of  the  book  has  been  to  ex¬ 
hibit  in  a  series  of  articles  of  permanent  value 

different  phases  of  economic  thought,  and  to  pre- 

/ 

sent  in  chronological  order  a  narrative  of  some  of 
the  more  important  events  and  influences  of  modern 
economic  history. 

In  this  edition  one  chapter  contained  in  the 
former  edition  has  been  omitted  and  five  new 
selections  have  been  introduced.  Appendices  have 
also  been  added  as  the  most  convenient  form  in 
which  to  place  laws,  purely  statistical  material,  and 


IV 


PREFATORY  NOTE . 


very  recent  economical  data.  A  bibliography  has 
likewise  been  inserted,  which  it  is  hoped  may  be 
of  service  in  the  formation  of  special  libraries  of 
economic  history.  The  present  edition  moreover 
contains  an  index. 

The  names  of  publishers,  to  whose  courtesy  is  due 
the  permission  to  reprint  a  number  of  the  selections, 
will  be  found  at  the  beginning  of  the  respective 
chapters. 

B.  R. 

Cambridge,  December,  1891. 


PREFATORY  NOTE  TO  THE  FOURTH  EDITION. 

Five  new  selections  have  been  added  to  the  present 
edition  of  the  Economic  History,  thereby  bringing  it 
down  to  the  end  of  the  nineteenth  century.  More 
recent  material  also  has  been  substituted  for  the  fifth 
Appendix.  The  Select  Bibliography  of  Economics, 
which  appeared  in  the  third  edition,  has  been  omitted, 
as  it  has  been  reprinted  in  a  separate  volume.  The 
names  of  the  authors  and  publishers,  through  whose 
kindness  the  reprints  have  been  allowed  to  be  made, 
are  placed,  as  in  former  editions,  at  the  opening  of 
the  several  chapters. 

B.  R. 

Cambridge,  Mass.,  September,  1903. 


CONTENTS. 


Chapter  Page 

I.  The  Colonial  Policy  of  Europe .  1 

From  Adam  Smith’s  Wealth  of  Nations. 

II.  The  Great  Inventions . 31 

From  Spencer  Walpole’s  History  of  England. 

III.  Economic  Causes  of  the  French  Revolution  .  55 

From  Heinrich  Yon  Sybel's  French  Revolution. 

IV.  The  Edicts  of  Stein  and  Hardenberg: 

The  Emancipating  Edict  of  Stein  ....  86 

From  J.  R.  Seeley’s  Life  and  Times  of  Stein. 

The  Agrarian  Legislation  of  Hardenberg  .  98 

From  R.  B.  D.  Morier’s  “The  Agrarian  Legislation 
of  Prussia  in  the  Present  Century  ”  in  Systems  of 
Land  Tenure  in  Various  Countries. 

I  , 

V.  The  Orders  in  Council . 109 

From  Leone  Levi’s  History  of  British  Commerce. 

VI.  The  Finances  of  England,  1793-1815  ....  126 

From  G.  R.  Porter’s  Progress  of  the  Nation. 

VII.  La  Politique  Commerciale  de  la  Restauration  148 

From  E.  Levasseur’s  Histoire  des  Classes  Ouvrieres 
en  France  depuis  1789  jusqu’k  nos  Jours. 

VIII.  The  Zollverein . ,170 

From  John  Bowring’s  Report  on  the  Prussian  Com¬ 
mercial  Union,  Pari,  Doc.,  1840. 

Le  Zollverein . 196 

From  A.  Legoyt’s  La  France  et  l’Etranger. 


vi 


CONTENTS. 


Chapteuj  Page 

IX.  The  Corn  Laws,  1801-1849  207 

From  Leone  Levi’s  History  of  British  Commerce. 

X.  The  New  Gold . 242 

From  J.  E.  Cairnes’  Essays  in  Political  Economy. 

XI.  France  sous  le  Second  Empire . 284 


From  E.  Levasseur’s  Histoire  cles  Classes  Ouvrieres 
en  France  depuis  1789  jusqu’a  nos  Jours. 

XII.  Recent  Changes  in  Transportation  and  Pro¬ 
duction  . 298 

From  David  A.  Wells’  Recent  Economic  Changes. 

XIII.  The  French  Indemnity: 

The  Payment  of  the  Five  Milliards  .  .  .  326 

From,  Blackwood’s  Edinburgh  Magazine,  1875. 

The  Application  of  the  Indemnity  .  .  .  350 

From  G.  Fr.  Kolb’s  The  Condition  of  Nations 
(Trans.  Mrs.  Brewer). 


XIV.  The  Liquidations  of  1873-76 .  355 

From  Robert  Giffen’s  Essays  in  Finance. 

XV.  The  United  States  in  1880: 

The  Increase  of  Population  from  1790  to 

1880  375 

From  Francis  A.  Walker  and  Henry  Gannett’s  Re¬ 
port  on  the  Progress  of  the  Nation,  Tenth  Census. 

The  Factory  System . 400 

From  Carroll  D.  Wright’s  Report  on  the  Factory 
System  of  the  United  States,  Tenth  Census. 

The  Cotton  Manufactures . 410 

From  Edward  Atkinson’s  Report  on  the  Cotton 
Manufactures,  Tenth  Census. 

The  Iron  and  Steel  Industries . 435 

From  James  M.  Swank’s  Statistics  of  the  Iron  and 
Steel  Production,  Tenth  Census. 


CONTENTS. 


Chapter 

XVI. 


XVII. 


XVIII. 


XIX. 


XX. 


XXI. 


XXII. 


I. 


II. 


«  • 
Til 

Page 

Les  Dettes  Publiques . ;  450 

From  Alfred  Neymarck’s  Les  Dettes  Publiques 
Europ^ennes. 

The  World’s  Progress  in  Trade  and  Industry  469 

From  F.  X.  von  Neumann-Spallart’s  Uebersichten 
der  Weltwirthschaft  (Translated  in  Journal  of  the 
Statistical  Society). 

English  Finances,  1837-1887  .  511 

By  Leonard  H.  Courtney.  From  the  Reign  of  Queen 
Victoria,  edited  by  T.  II.  Ward. 

L’Essor  Industriel  de  L’Allemagne  ....  533 

From  G.  Blondel’s  L’Essor  Industriel  et  Commercial 
du  Peuple  Allemand. 

The  American  Legal  Tender  Paper  ....  546 

By  Charles  F.  Dunbar.  From  the  Quarterly  Journal 


of  Economics,  1897. 

The  American  Iron  Industry . 568 

By  F.  W.  Taussig.  From  the  Quarterly  Journal  of 
Economics,  1900. 

Le  XIXe  SikcLE . 591 

By  G.  de  Molinari.  From  Journal  des  Economistes, 

1901. 


APPENDICES. 


Leading  Sections  from  the  English  Navigation 

Acts . 607 

From  English  Statutes  at  Large. 

Important  Sections  of  American  Navigation 

Acts . 611 

From  United  States  Statutes  at  Large. 


CONTENTS. 


viii 

Chapter  Page 

III.  The  American  Civil  War: 

Cost  of  the  Civil  War . 616 


From  David  A.  Wells’  Report  as  Special  Commissioner 
of  the  Revenue,  1869. 

The  Payment  of  the  War  Debt . 618 

From  Hugh  McCulloch’s  Report  as  Secretary  of  the 
Treasury,  1884. 

IV.  The  Growth  of  Canada,  1867-1900  ....  621 

From  George  Johnson’s  Graphic  Statistics  of  Canada. 

V.  American  Progress  in  Manufactures  .  .  .  .  622 

By  S.  N.  D.  North.  From  Twelfth  Census,  vii. 


Index 


637 


ECONOMIC  HISTORY. 


i. 


THE  COLONIAL  POLICY  OF  EUROPE. 

From  Adam  Smith’s  Wealth  of  Nations,  Book  IV.,  Ch.  VII.,. 

Part  II. 


'HE  colony  of  a  civilized  nation  which  takes  possession; 


J-  either  of  a  waste  country  or  of  one  so  thinly  inhabited 
that  the  natives  easily  give  place  to  the  new  settlers,  ad¬ 
vances  more  rapidly  to  wealth  and  greatness  than  any  other 
human  society. 

The  colonists  carry  out  with  them  a  knowledge  of  agri¬ 
culture  and  of  other  useful  arts,  superior  to  what  can  grow 
up  of  its  own  accord  in  the  course  of  many  centuries  among 
savage  and  barbarous  nations.  They  carry  out  with  them, 
too,  the  habit  of  subordination,  some  notion  of  the  regular 
government  which  takes  place  in  their  own  country,  of  the 
system  of  laws  which  supports  it,  and  of  a  regular  adminis¬ 
tration  of  justice ;  and  they  naturally  establish  something  of 
the  same  kind  in  the  new  settlement.  But  among  savage 
and  barbarous  nations  the  natural  progress  of  law  and  gov¬ 
ernment  is  still  slower  than  the  natural  progress  of  arts, 
after  law  and  government  have  been  so  far  established  as  is 
necessary  for  their  protection.  Every  colonist  gets  more 
land  than  he  can  possibly  cultivate.  He  has  no  rent,  and 
scarce  any  taxes  to  pay.  No  landlord  shares  with  him  in 
its  produce,  and  the  share  of  the  sovereign  is  commonly  but 
a  trifle.  He  has  every  motive  to  render  as  great  as  possible 
a  produce  which  is  thus  to  be  almost  entirely  his  own.  But 


l 


9 


ECONOMIC  HISTORY. 


his  land  is  commonly  so  extensive  that  with  all  his  own 
industry,  and  with  all  the  industry  of  other  people  whom  he 
can  get  to  employ,  he  can  seldom  make  it  produce  the  tenth 
part  of  what  it  is  capable  of  producing.  He  is  eager,  there¬ 
fore,  to  collect  laborers  from  all  quarters,  and  to  reward 
them  with  the  most  liberal  wages.  But  those  liberal  wages, 
joined  to  the  plenty  and  cheapness  of  land,  soon  make  those 
laborers  leave  him,  in  order  to  become  landlords  themselves, 
and  to  reward,  with  equal  liberality,  other  laborers,  who 
soon  leave  them  for  the  same  reason  that  they  left  their  first 
master.  The  liberal  reward  of  labor  encourages  marriage. 
The  children,  during  the  tender  years  of  infancy,  are  well 
fed  and  properly  taken  care  of,  and  when  they  are  grown 
up  the  value  of  their  labor  greatly  overpays  their  mainten¬ 
ance.  When  arrived  at  maturity  the  high  price  of  labor 
and  the  low  price  of  land  enable  them  to  establish  them¬ 
selves  in  the  same  manner  as  their  fathers  did  before  them. 

In  other  countries  rent  and  profit  eat  up  wages,  and  the 
two  superior  orders  of  people  oppress  the  inferior  one.  But 
in  new  colonies  the  interest  of  the  two  superior  orders  obliges 
them  to  treat  the  inferior  one  with  more  generosity  and 
humanity;  at  least,  where  that  inferior  one  is  not  in  a  state 
of  slavery.  Waste  lands,  of  the  greatest  natural  fertility, 
are  to  be  had  for  a  trifle.  The  increase  of  revenue  which 
the  proprietor,  who  is  always  the  undertaker,  expects  from 
their  improvement,  constitutes  his  profit;  which  in  these 
circumstances  is  commonly  very  great.  But  this  great  profit 
cannot  be  made  without  employing  the  labor  of  other  people 
in  clearing  and  cultivating  the  land;  and  the  disproportion 
between  the  great  extent  of  the  land  and  the  small  number 
of  the  people,  which  commonly  takes  place  in  new  colonies, 
makes  it  difficult  for  him  to  get  this  labor.  He  does  not, 
therefore,  dispute  about  wages,  but  is  willing  to  employ 
labor  at  any  price.  The  high  wages  of  labor  encourage 
population.  The  cheapness  and  plenty  of  good  land  encour¬ 
age  improvement,  and  enable  the  proprietor  to  pay  those 
high  wages.  In  those  wages  consists  almost  the  whole  price 
of  the  land;  and  though  they  are  high,  considered  as  the 


COLONIAL  POLICY  OF  EUROPE. 


3 


wages  of  labor,  they  are  low,  considered  as  the  price  of  what 
is  so  very  valuable.  What  encourages  the  progress  of  popu¬ 
lation  and  improvement  encourages  that  of  real  wealth  and 
greatness. 

The  progress  of  many  of  the  ancient  Greek  colonies 
towards  wealth  and  greatness  seems  accordingly  to  have 
been  very  rapid.  In  the  course  of  a  century  or  two  several 
of  them  appear  to  have  rivalled,  and  even  to  have  surpassed, 
their  mother  cities.  Syracuse  and  Agrigentum  in  Sicily, 
Tarentum  and  Locri  in  Italy,  Ephesus  and  Miletus  in  Lesser 
Asia,  appear  by  all  accounts  to  have  been  at  least  equal  to 
any  of  the  cities  of  ancient  Greece.  Though  posterior  in 
their  establishment,  yet  all  the  arts  of  refinement,  philoso¬ 
phy,  poetry,  and  eloquence,  seem  to  have  been  cultivated  as 
early,  and  to  have  been  improved  as  highly  in  them  as  in 
any  part  of  the  mother  country.  The  schools  of  the  two  old¬ 
est  Greek  philosophers,  those  of  Thales  and  Pythagoras,  were 
established,  it  is  remarkable,  not  in  ancient  Greece,  but  the 
one  in  an  Asiatic,  the  other  in  an  Italian  colony.  All  those 
colonies  had  established  themselves  in  countries  inhabited 
by  savage  and  barbarous  nations,  who  easily  gave  place  to 
the  new  settlers.  They  had  plenty  of  good  land,  and  as  they 
were  altogether  independent  of  the  mother  city,  they  were 
at  liberty  to  manage  their  own  affairs  in  the  way  that  they 
judged  was  most  suitable  to  their  own  interest. 

The  history  of  the  Roman  colonies  is  by  no  means  so  bril¬ 
liant.  Some  of  them,  indeed,  such  as  Florence,  have  in  the 
course  of  many  ages,  and  after  the  fall  of  the  mother  city, 
grown  up  to  be  considerable  States.  But  the  progress  of  no 
one  of  them  seems  ever  to  have  been  very  rapid.  They  were 
all  established  in  conquered  provinces,  which  in  most  cases 
had  been  fully  inhabited  before.  The  quantity  of  land  as¬ 
signed  to  each  colonist  was  seldom  very  considerable,  and, 
as  the  colony  was  not  independent,  they  were  not  always  at 
liberty  to  manage  their  own  affairs  in  the  way  that  they 
judged  was  most  suitable  to  their  own  interest. 

In  the  plenty  of  good  land  the  European  colonies  estab¬ 
lished  in  America  and  the  West  Indies  resemble,  and  even 


4 


ECONOMIC  HISTORY. 


greatly  surpass,  those  of  ancient  Greece.  In  their  depend¬ 
ency  upon  the  mother  State  they  resemble  those  of  ancient 
Rome;  but  their  great  distance  from  Europe  has  in  all  of 
them  alleviated  more  or  less  the  effects  of  this  dependency. 
Their^  situation  has  placed  them  less  in  the  view  and  less  in 
the  power  of  their  mother  country.  In  pursuing  their  inter¬ 
est  their  own  way,  their  conduct  has,  upon  many  occasions, 
been  overlooked,  either  because  not  known  or  not  under¬ 
stood  in  Europe ;  and  upon  some  occasions  it  has  been  fairly 
suffered  and  submitted  to,  because  their  distance  rendered 
it  difficult  to  restrain  it.  Even  the  violent  and  arbitrary 
government  of  Spain  has,  upon  many  occasions,  been  obliged 
to  recall  or  soften  the  orders  which  had  been  given  for  the 
government  of  her  colonies,  for  fear  of  a  general  insurrection. 
The  progress  of  all  the  European  colonies  in  wealth,  popula¬ 
tion,  and  improvement,  has  accordingly  been  very  great. 

The  crown  of  Spain,  by  its  share  of  the  gold  and  silver, 
derived  some  revenue  from  its  colonies  from  the  moment  of 
their  first  establishment.  It  was  a  revenue,  too,  of  a  nature 
to  excite  in  human  avidity  the  most  extravagant  expectations 
of  still  greater  riches.  The  Spanish  colonies,  therefore, 
from  the  moment  of  their  first  establishment,  attracted  very 
much  the  attention  of  their  mother  country;  while  those  of 
the  other  European  nations  were  for  a  long  time  in  a  great 
measure  neglected.  The  former  did  not,  perhaps,  thrive 
the  better  in  consequence  of  this  attention,  nor  the  latter  the 
worse  in  consequence  of  this  neglect.  In  proportion  to  the 
extent  of  the  country  which  they  in  some  measure  possess, 
the  Spanish  colonies  are  considered  as  less  populous  and 
thriving  than  those  of  almost  any  other  European  nation. 
The  progress  even  of  the  Spanish  colonies,  however,  in  popu¬ 
lation  and  improvement,  has  certainly  been  very  rapid  and 
very  great.  The  city  of  Lima,  founded  since  the  conquest, 
is  represented  in  Ulloa  as  containing  fifty  thousand  inhabit¬ 
ants  near  thirty  years  ago.  Quito,  which  had  been  but  a 
miserable  hamlet  of  Indians,  is  represented  by  the  same 
author  as  in  his  time  equally  populous.  Geinelli  Carreri,  a 
pretended  traveller,  it  is  said,  indeed,  but  who  seems  every- 


COLONIAL  POLICY  OF  EUROPE. 


5 


where  to  have  written  upon  extreme  good  information, 
represents  the  city  of  Mexico  as  containing  a  hundred  thou¬ 
sand  inhabitants,  —  a  number  which,  in  spite  of  all  the  exag¬ 
gerations  of  the  Spanish  writers,  is  probably  more  than  five 
times  greater  than  what  it  contained  in  the  time  of  Monte¬ 
zuma.  These  numbers  exceed  greatly  those  of  Boston,  New 
York,  and  Philadelphia,  the  three  greatest  cities  of  the 
English  colonies.  Before  the  conquest  of  the  Spaniards 
there  were  no  cattle  fit  for  draught  either  in  Mexico  or  Peru. 
The  lama  was  their  only  beast  of  burden,  and  its  strength 
seems  to  have  been  a  good  deal  inferior  to  that  of  a  common 
ass.  The  plough  was  unknown  among  them.  They  were 
ignorant  of  the  use  of  iron.  They  had  no  coined  money,  nor 
any  established  instrument  of  commerce  of  any  kind.  Their 
commerce  was  carried  on  by  barter.  A  sort  of  wooden  spade 
was  their  principal  instrument  of  agriculture.  Sharp  stones 
served  them  for  knives  and  hatchets  to  cut  with ;  fish-bones 
and  the  hard  sinews  of  certain  animals  served  them  for 
needles  to  sew  with;  and  these  seem  to  have  been  their 
principal  instruments  of  trade.  In  this  state  of  things,  it 
seems  impossible,  that  either  of  those  empires  could  have 
been  so  much  improved  or  so  well  cultivated  as  at  pres¬ 
ent,  when  they  are  plentifully  furnished  with  all  sorts  of 
European  cattle,  and  when  the  use  of  iron,  of  the  plough, 
and  of  many  of  the  arts  of  Europe,  has  been  introduced 
among  them.  But  the  populousness  of  every  country  must 
be  in  proportion  to  the  degree  of  its  improvement  and  culti¬ 
vation.  In  spite  of  the  cruel  destruction  of  the  natives 
which  followed  the  conquest,  these  two  great  empires  are, 
probably,  more  populous  now  than  they  ever  were  before: 
and  the  people  are  surely  very  different;  for  we  must  ac¬ 
knowledge,  I  apprehend,  that  the  Spanish  creoles  are  in 
many  respects  superior  to  the  ancient  Indians. 

After  the  settlements  of  the  Spaniards,  that  of  the  Portu¬ 
guese  in  Brazil  is  the  oldest  of  any  European  nation  in  Amer¬ 
ica.  But  as  for  a  long  time  after  the  first  discovery  neither 
gold  nor  silver  mines  were  found  in  it,  and  as  it  afforded 
upon  that  account  little  or  no  revenue  to  the  crown,  it  was 


6 


ECONOMIC  HISTORY. 


for  a  long  time  in  a  great  measure  neglected;  and  during 
this  state  of  neglect  it  grew  up  to  be  a  great  and  powerful 
colony.  While  Portugal  was  under  the  dominion  of  Spain, 
Brazil  was  attacked  by  the  Dutch,  who  got  possession  of 
seven  of  the  fourteen  provinces  into  which  it  is  divided. 
They  expected  soon  to  conquer  the  other  seven,  when  Portu¬ 
gal  recovered  its  independency  by  the  elevation  of  the  family 
of  Braganza  to  the  throne.  The  Dutch  then,  as  enemies  to 
the  Spaniards,  became  friends  to  the  Portuguese,  who  were 
likewise  the  enemies  of  the  Spaniards.  They  agreed,  there¬ 
fore,  to  leave  that  part  of  Brazil  which  they  had  not  con¬ 
quered  to  the  king  of  Portugal,  who  agreed  to  leave  that  part 
which  they  had  conquered  to  them,  as  a  matter  not  worth 
disputing  about  with  such  good  allies.  But  the  Dutch 
government  soon  began  to  oppress  the  Portuguese  colonists, 
who,  instead  of  amusing  themselves  with  complaints,  took 
arms  against  their  new  masters,  and  by  their  own  valor  and 
resolution,  with  the  connivance  indeed,  but  without  any 
avowed  assistance  from  the  mother  country,  drove  them  out 
of  Brazil.  The  Dutch,  therefore,  finding  it  impossible  to  keep 
any  part  of  the  country  to  themselves,  were  contented  that 
it  should  be  entirely  restored  to  the  crown  of  Portugal.  In 
this  colony  there  are  said  to  be  more  than  six  hundred  thou¬ 
sand  people,  either  Portuguese  or  descended  from  Portuguese, 
creoles,  mulattoes,  and  a  mixed  race  between  Portuguese  and 
Brazilians.  No  one  colony  in  America  is  supposed  to  contain 
so  great  a  number  of  people  of  European  extraction. 

Towards  the  end  of  the  fifteenth,  and  during  the  greater 
part  of  the  sixteenth  century,  Spain  and  Portugal  were  the 
two  great  naval  powers  upon  the  ocean ;  for  though  the  com¬ 
merce  of  Venice  extended  to  every  part  of  Europe,  its  fleets 
had  scarce  ever  sailed  beyond  the  Mediterranean.  The  Span¬ 
iards,  in  virtue  of  the  first  discovery,  claimed  all  America 
as  their  own;  and  though  they  could  not  hinder  so  great  a 
naval  power  as  that  of  Portugal  from  settling  in  Brazil,  such 
was  at  that  time  the  terror  of  their  name  that  the  greater 
part  of  the  other  nations  of  Europe  were  afraid  to  establish 
themselves  in  any  other  part  of  that  great  continent.  The 


COLONIAL  POLICY  OF  EUROPE. 


7 


French  who  attempted  to  settle  in  Florida  were  all  mur¬ 
dered  by  the  Spaniards.  But  the  declension  of  the  naval 
power  of  this  latter  nation,  in  consequence  of  the  defeat  or 
miscarriage  of  what  they  called  their  Invincible  Armada, 
which  happened  towards  the  end  of  the  sixteenth  century, 
put  it  out  of  their  power  to  obstruct  any  longer  the  settle¬ 
ments  of  the  other  European  nations.  In  the  course  of  the 
seventeenth  century,  therefore,  the  English,  French,  Dutch, 
Danes,  and  Swedes,  all  the  great  nations  who  had  any  ports 
upon  the  ocean,  attempted  to  make  some  settlements  in  the 
new  world. 

The  Swedes  established  themselves  in  New  Jersey;  and 
the  number  of  Swedish  families  still  to  be  found  there  suffi¬ 
ciently  demonstrates  that  this  colony  was  very  likely,  to 
prosper  had  it  been  protected  by  the  mother  country.  But 
being  neglected  by  Sweden  it  was  soon  swallowed  up  by  the 
Dutch  colony  of  New  York,  which  again,  in  1674,  fell  under 
the  dominion  of  the  English. 

The  small  islands  of  St.  Thomas  and  Santa  Cruz  are  the 
only  countries  in  the  new  world  that  have  ever  been  pos¬ 
sessed  by  the  Danes.  These  little  settlements  too  were 
under  the  government  of  an  exclusive  company,  which  had 
the  sole  right  both  of  purchasing  the  surplus  produce  of  the 
colonists  and  of  supplying  them  with  such  goods  of  other 
countries  as  they  wanted,  and  which,  therefore,  both  in  its 
purchases  and  sales,  had  not  only  the  power  of  oppressing 
them,  but  the  greatest  temptation  to  do  so.  The  government 
of  an  exclusive  company  of  merchants  is,  perhaps,  the  worst 
of  all  governments  for  any  country  whatever.  It  was  not, 
however,  able  to  stop  altogether  the  progress  of  these  colo¬ 
nies,  though  it  rendered  it  more  slow  and  languid.  The 
late  king  of  Denmark  dissolved  this  company,  and  since  that 
time  the  prosperity  of  these  colonies  has  been  very  great. 

The  Dutch  settlements  in  the  West,  as  well  as  those  in  the 
East  Indies,  were  originally  put  under  the  government  of  an 
exclusive  company.  The  progress  of  some  of  them,  there¬ 
fore,  though  it  has  been  considerable,  in  comparison  with 
that  of  almost  any  country  that  has  been  long  peopled  and 


8 


ECONOMIC  HISTORY. 


established,  has  been  languid  and  slow  in  comparison  with 
that  of  the  greater  part  of  new  colonies.  The  colony  of 
Surinam,  though  very  considerable,  is  still  inferior  to  the 
greater  part  of  the  sugar  colonies  of  the  other  European 
nations.  The  colony  of  Nova  Belgia,  now  divided  into  the 
two  provinces  of  New  York  and  New  Jersey,  would  probably 
have  soon  become  considerable  too,  even  though  it  had  re¬ 
mained  under  the  government  of  the  Dutch.  The  plenty  and 
cheapness  of  good  land  are  such  powerful  causes  ot  prosper¬ 
ity  that  the  very  worst  government  is  scarce  capable  of 
checking  altogether  the  efficacy  of  their  operation.  The 
great  distance  too  from  the  mother  country  would  enable  the 
colonists  to  evade  more  or  less,  by  smuggling,  the  monopoly 
which  the  company  enjoyed  against  them.  At  present  the 
company  allows  all  Dutch  ships  to  trade  to  Surinam  upon 
paying  two  and  a  half  per  cent  upon  the  value  of  their  cargo 
for  a  license;  and  only  reserves  to  itself  exclusively  the  di¬ 
rect  trade  from  Africa  to  America,  which  consists  almost 
entirely  in  the  slave  trade.  This  relaxation  in  the  exclu¬ 
sive  privileges  of  the  company  is  probably  the  principal  cause 
of  that  degree  of  prosperity  which  that  colony  at  present 
enjoys.  Curagoa  and  Eustatia,  the  two  principal  islands 
belonging  to  the  Dutch,  are  free  ports  open  to  the  ships  of 
ail  nations ;  and  this  freedom,  in  the  midst  of  better  colo¬ 
nies  whose  ports  are  open  to  those  of  one  nation  only,  has 
been  the  great,  cause  of  the  prosperity  of  those  two  barren 
islands. 

The  French  colony  of  Canada  was,  during  the  greater 
part  of  the  last  century,  and  some  part  of  the  present,  under 
the  government  of  an  exclusive  company.  Under  so  unfav¬ 
orable  an  administration  its  progress  was  necessarily  very 
slow  in  comparison  with  that  of  other  new  colonies;  but  it  be¬ 
came  much  more  rapid  when  this  company  was  dissolved  after 
the  fall  of  what  is  called  the  Mississippi  scheme.  When  the 
English  got  possession  of  this  country  they  found  in  it  near 
double  the  number  of  inhabitants  which  Father  Charlevoix 
had  assigned  to  it  between  twenty  and  thirty  years  before. 
That  Jesuit  had  travelled  over  the  whole  country,  and  had 


COLONIAL  POLICY  OF  EUROPE. 


9 


no  inclination  to  represent  it  as  less  considerable  than  it 
really  was. 

The  French  colony  of  St.  Domingo  was  established  by 
pirates  and  freebooters,  who  for  a  long  time  neither  re¬ 
quired  the  protection  nor  acknowledged  the  authority  of 
France ;  and  when  that  race  of  banditti  became  so  far  citi¬ 
zens  as  to  acknowledge  this  authority,  it  was  for  a  long  time 
necessary  to  exercise  it  with  very  great  gentleness.  During 
this  period  the  population  and  improvement  of  this  colony 
increased  very  fast.  Even  the  oppression  of  the  exclusive 
company,  to  which  it  was  for  some  time  subjected,  with  all 
the  other  colonies  of  France,  though  it  no  doubt  retarded, 
had  not  been  able  to  stop  its  progress  altogether.  The 
course  of  its  prosperity  returned  as  soon  as  it  was  relieved 
.  from  that  oppression.  It  is  now  the  most  important  of  the 
sugar  colonies  of  the  West  Indies,  and  its  produce  is  said  to 
be  greater  than  that  of  all  the  English  sugar  colonies  put  to¬ 
gether.  The  other  sugar  colonies  of  France  are  in  general 
all  very  thriving. 

But  there  are  no  colonies  of  which  the  progress  has  been 
more  rapid  than  that  of  the  English  in  North  America. 

Plenty  of  good  land  and  liberty  to  manage  their  own 
affairs  their  own  way,  seem  to  be  the  two  great  causes  of  the 
prosperity  of  all  new  colonies. 

In  the  plenty  of  good  land,  the  English  colonies  of  North 
America,  though  no  doubt  very  abundantly  provided,  are, 
however,  inferior  to  those  of  the  Spaniards  and  Portuguese, 
and  not  superior  to  some  of  those  possessed  by  the  French 
before  the  late  war.  But  the  political  institutions  of  the 
English  colonies  have  been  more  favorable  to  the  improve¬ 
ment  and  cultivation  of  this  land  than  those  of  any  of  the 
other  three  nations. 

First,  the  engrossing  of  uncultivated  land,  though  it  has 

by  no  means  been  prevented  altogether,  has  been  more  re- 

_  * 

strained  in  the  English  colonies  than  in  any  other.  The 
colony  law  which  imposes  upon  every  proprietor  the  obliga¬ 
tion  of  improving  and  cultivating,  within  a  limited  time,  a 
certain  proportion  of  his  lands,  and  which,  in  case  of  failure, 


10 


ECONOMIC  HISTORY. 


t 

declares  those  neglected  lands  grantable  to  any  other  person, 
though  it  has  not,  perhaps,  been  very  strictly  executed,  has, 
however,  had  some  effect. 

Secondly,  in  Pennsylvania  there  is  no  right  of  primogeni¬ 
ture,  and  lands,  like  movables,  are  divided  equally  among 
all  the  children  of  the  family.  In  three  of  the  provinces  of 
New  England  the  oldest  has  only  a  double  share,  as  in  the 
Mosaical  law.  Though  in  those  provinces,  therefore,  too 
great  a  quantity  of  land  should  sometimes  be  engrossed  by 
a  particular  individual,  it  is  likely,  in  the  course  of  a  genera¬ 
tion  or  two,  to  be  sufficiently  divided  again.  In  the  other 
English  colonies,  indeed,  the  right  of  primogeniture  takes 
place,  as  in  the  law  of  England.  But  in  all  the  English 
colonies  the  tenure  of  the  lands,  which  are  all  held  by  free 
socage,  facilitates  alienation,  and  the  grantee  of  any  exten¬ 
sive  tract  of  land  generally  finds  it  for  his  interest  to  alien¬ 
ate,  as  fast  as  he  can,  the  greater  part  of  it,  reserving  only 
a  small  quit-rent.  In  the  Spanish  and  Portuguese  colonies, 
what  is  called  the  right  of  Majorazzo1  takes  place  in  the 
succession  of  all  those  great  estates  to  which  any  title  of 
honor  is  annexed.  Such  estates  go  all  to  one  person,  and 
are  in  effect  entailed  and  unalienable.  The  French  colonies, 
indeed,  are  subject  to  the  custom  of  Paris,  which,  in  the  in¬ 
heritance  of  land,  is  much  more  favorable  to  the  younger 
children  than  the  law  of  England.  But,  in  the  French  colo¬ 
nies,  if  any  part  of  an  estate  held  by  the  noble  tenure  of 
chivalry  and  homage  is  alienated,  it  is  for  a  limited  time 
subject  to  the  right  of  redemption,  either  by  the  heir  of  the 
superior  or  by  the  heir  of  the  family;  and  all  the  largest 
estates  of  the  country  are  held  by  such  noble  tenures,  which 
necessarily  embarrass  alienation.  But  in  a  new  colony  a 
great  uncultivated  estate  is  likely  to  be  much  more  speedily 
divided  by  alienation  than  by  succession.  The  plenty  and 
cheapness  of  good  land,  it  has  already  been  observed,  are  the 
principal  causes  of  the  rapid  prosperity  of  new  colonies. 
The  engrossing  of  land,  in  effect,  destroys  this  plenty  and 
cheapness.  The  engrossing  of  uncultivated  land,  besides,  is 

1  Jus  Majorat  us. 


COLONIAL  POLICY  OF  EUROPE. 


11 


the  greatest  obstruction  to  its  improvement.  But  the  labor 
that  is  employed  in  the  improvement  and  cultivation  of  land 
affords  the  greatest  and  most  valuable  produce  to  the  society. 
The  produce  of  labor  in  this  case  pays  not  only  its  own 
wages,  and  the  profit  of  the  stock  which  employs  it,  but  the 
rent  of  the  land  too  upon  which  it  is  employed.  The  labor 
of  the  English  colonists,  therefore,  being  more  employed  in 
the  improvement  and  cultivation  of  land,  is  likely  to  afford 
a  greater  and  more  valuable  produce  than  that  of  any  of 
the  other  three  nations,  which  by  the  engrossing  of  land  is 
more  or  less  diverted  toward  other  employments. 

Thirdly,  the  labor  of  the  English  colonists  is  not  only 
likely  to  afford  a  greater  and  more  valuable  produce,  but,  in 
consequence  of  the  moderation  of  their  taxes,  a  greater  pro¬ 
portion  of  this  produce  belongs  to  themselves,  which  they 
may  store  up  and  employ  in  putting  into  motion  a  still  greater 
quantity  of  labor.  The  English  colonists  have  never  yet 
contributed  anything  towards  the  defence  of  the  mother  coun¬ 
try,  or  towards  the  support  of  its  civil  government.  They 
themselves,  on  the  contrary,  have  hitherto  been  defended  al¬ 
most  entirely  at  the  expense  of  the  mother  country.  But  the 
expense  of  fleets  and  armies  is  out  of  all  proportion  greater 
than  the  necessary  expense  of  civil  government.  The  ex¬ 
pense  of  their  own  civil  government  has  always  been  very 
moderate.  It  has  generally  been  confined  to  what  was  neces¬ 
sary  for  paying  competent  salaries  to  the  governor,  to  the 
judges,  and  to  some  other  officers  of  police,  and  for  main¬ 
taining  a  few  of  the  most  useful  public  works.  The  expense 
of  the  civil  establishment  of  Massachusetts  Bay,  before  the 
commencement  of  the  present  disturbances,  used  to  be  but 
about  £18,000  a  year;  that  of  New  Hampshire  and  Rhode 
Island,  £8,500  each;  that  of  Connecticut,  £4,000;  that  of 
New  York  and  Pennsylvania,  £4,500  each;  that  of  New 
Jersey,  £1,200;  that  of  Virginia  and  South  Carolina,  £8,000 
each.  The  civil  establishments  of  Nova  Scotia  and  Georgia 
are  partly  supported  by  an  annual  grant  of  Parliament. 
But  Nova  Scotia  pays,  besides,  about  £7,000  a  year  to¬ 
wards  the  public  expenses  of  the  colony ;  and  Georgia  about 


12 


ECONOMIC  HISTORY. 


<£2,500  a  year.  All  the  different  civil  establishments  in 
North  America,  in  short,  exclusive  of  those  of  Maryland  and 
North  Carolina,  of  which  no  exact  account  has  been  got,  did 
not,  before  the  commencement  of  the  present  disturbances, 
cost  the' inhabitants  above  £64,700  a  year,  —  an  ever-memo- 
rable  example  at  how  small  an  expense  three  millions  of 
people  may  not  only  be  governed,  but  well  governed.  The 
most  important  part  of  the  expense  of  government,  indeed, 
that  of  defence  and  protection,  has  constantly  fallen  upon 
the  mother  country.  The  ceremonial,  too,  of  the  civil  gov¬ 
ernment  in  the  colonies,  upon  the  reception  of  a  new  gov¬ 
ernor,  upon  the  opening  of  a  new  assembly,  etc.,  though 
sufficiently  decent,  is  not  accompanied  with  any  expensive 
pomp  or  parade.  Their  ecclesiastical  government  is  con¬ 
ducted  upon  a  plan  equally  frugal.  Tithes  are  unknown 
among  them;  and  their  clergy,  who  are  far  from  being 
numerous,  are  maintained  either  by  moderate  stipends,  or  by 
the  voluntary  contributions  of  the  people.  The  power  of 
Spain  and  Portugal,  on  the  contrary,  derives  some  support 
from  the  taxes  levied  upon  their  colonies.  France,  indeed, 
has  never  drawn  any  considerable  revenue  from  its  colonies, 
the  taxes  which  it  levies  upon  them  being  generally  spent 
among  them.  But  the  colony  government  of  all  these  three 
nations  is  conducted  upon  a  much  more  expensive  plan,  and 
is  accompanied  with  a  much  more  expensive  ceremonial.  The 
sums  spent  upon  the  reception  of  a  new  viceroy  of  Peru,  for 
example,  have  frequently  been  enormous.  Such  ceremonials 
are  not  only  real  taxes  paid  by  the  rich  colonists  upon  those 
particular  occasions,  but  they  serve  to  introduce  among  them 
the  habit  of  vanity  and  expense  upon  all  other  occasions. 
They  are  not  only  very  grievous  occasional  taxes,  but  they 
contribute  to  establish  perpetual  taxes  of  the  same  kind  still 
more  grievous,  —  the  ruinous  taxes  of  private  luxury  and  ex¬ 
travagance.  In  the  colonies  of  all  those  three  nations, 
too,  the  ecclesiastical  government  is  extremely  oppressive. 
Tithes  take  place  in  all  of  them,  and  are  levied  with  the 
utmost  rigor  in  those  of  Spain  and  Portugal.  All  of  them, 
besides,  are  oppressed  with  a  numerous  race  of  mendicant 


COLONIAL  POLICY  OF  EUROPE. 


13 


friars,  whose  beggary,  being  not  only  licensed  but  consecrated 
by  religion,  is  a  most  grievous  tax  upon  the  poor  people, 
who  are  most  carefully  taught  that  it  is  a  duty  to  give,  and 
a  very  great  sin  to  refuse  them  their  charity.  Over  and 
above  all  this,  the  clergy  are,  in  all  of  them,  the  greatest 
engrossers  of  land. 

Fourthly,  in  the  disposal  of  their  surplus  produce,  or  of 
what  is  over  and  above  their  own  consumption,  the  English 
colonies  have  been  more  favored,  and  have  been  allowed  a 
more  extensive  market,  than  those  of  any  other  European  na¬ 
tion.  Every  European  nation  has  endeavored,  more  or  less, 
to  monopolize  to  itself  the  commerce  of  its  colonies,  and  upon 
that  account  has  prohibited  the  ships  of  foreign  nations  from 
trading  to  them,  and  has  prohibited  them  from  importing  Eu¬ 
ropean  goods  from  any  foreign  nation.  But  the  manner  in 
which  this  monopoly  has  been  exercised  in  different  nations 
has  been  very  different. 

Some  nations  have  given  up  the  whole  commerce  of  their 
colonies  to  an  exclusive  company,  of  whom  the  colonies  were 
obliged  to  buy  all  such  European  goods  as  they  wanted,  and 
to  whom  they  were  obliged  to  sell  the  whole  of  their  own 
surplus  produce.  It  was  the  interest  of  the  company,  there¬ 
fore,  not  only  to  sell  the  former  as  dear,  and  to  buy  the  latter 
as  cheap  as  possible,  but  to  buy  no  more  of  the  latter,  even 
at  this  low  price,  than  what  they  could  dispose  of  for  a  very 
high  price  in  Europe.  It  was  their  interest  not  only  to 
degrade  in  all  cases  the  value  of  the  surplus  produce  of  the 
colony,  but  in  many  cases  to  discourage  and  keep  down  the 
natural  increase  of  its  quantity.  Of  all  the  expedients  that 
can  well  be  contrived  to  stunt  the  natural  growth  of  a  new 
colony,  that  of  an  exclusive  company  is  undoubtedly  the 
most  effectual.  This,  however,  has  been  the  policy  of  Hol¬ 
land,  though  their  company,  in  the  course  of  the  present 
century,  has  given  up  in  many  respects  the  exertion  of  their 
exclusive  privilege.  This,  too,  was  the  policy  of  Denmark 
till  the  reign  of  the  late  king.  It  has  occasionally  been  the 
policy  of  France,  and  of  late,  since  1T55,  after  it  had  been 
abandoned  by  all  other  nations  on  account  of  its  absurdity, 


14 


ECONOMIC  HISTORY. 


it  has  become  the  policy  of  Portugal  with  regard  at  least  to 
two  of  the  principal  provinces  of  Brazil,  Pernambuco  and 
Marannon. 

Other  nations,  without  establishing  an  exclusive  company, 
have  confined  the  wdiole  commerce  of  their  colonies  to  a  par¬ 
ticular  port  of  the  mother  country,  from  whence  no  ship  was 
allowed  to  sail  but  either  in  a  fleet,  and  at  a  particular  sea¬ 
son,  or,  if  single,  in  consequence  of  a  particular  license, 
which  in  most  cases  was  very  well  paid  for.  This  policy 
opened,  indeed,  the  trade  of  the  colonies  to  all  the  natives  of 
the  mother  country,  provided  they  traded  from  the  proper  port, 
at  the  proper  season,  and  in  the  proper  vessels.  But  as  all 
the  different  merchants  who  joined  their  stocks  in  order  to  fit 
out  those  licensed  vessels  would  find  it  for  their  interest  to 
act  in  concert,  the  trade  which  was  carried  on  in  this  manner 
would  necessarily  be  conducted  very  nearly  upon  the  same 
principles  as  that  of  an  exclusive  company.  The  profit  of 
those  merchants  would  be  almost  equally  exorbitant  and  op¬ 
pressive.  The  colonies  would  be  ill  supplied  and  would  be 
obliged  both  to  buy  very  dear  and  to  sell  very  cheap.  This, 
however,  till  within  these  few  years,  had  always  been  the  pol¬ 
icy  of  Spain ;  and  the  price  of  all  European  goods,  accordingly, 
is  said  to  have  been  enormous  in  the  Spanish  West  Indies. 
At  Quito,  we  are  told  by  Ulloa,  a  pound  of  iron  sold  for  about 
four  and  sixpence,  and  a  pound  of  steel  for  about  six  and  nine- 
pence  sterling.  But  it  is  chiefly  in  order  to. purchase  Euro¬ 
pean  goods  that  the  colonies  part  with  their  own  produce. 
The  more,  therefore,  they  pay  for  the  one,  the  less  they  really 
get  for  the  other,  and  the  dearness  of  the  one  is  the  same  thing 
with  the  cheapness  of  the  other.  The  policy  of  Portugal  is 
in  this  respect  the  same  as  the  ancient  policy  of  Spain,  with 
regard  to  all  its  colonies  except  Pernambuco  and  Marannon, 
and  with  regard  to  these  it  has  lately  adopted  a  still  worse. 

Other  nations  leave  the  trade  of  their  colonies  free  to  all 
their  subjects,  who  may  carry  it  on  from  all  the  different  ports 
of  the  mother  country,  and  who  have  occasion  for  no  other  li¬ 
cense  than  the  common  dispatches  of  the  custom-house.  In 
this  case  the  number  and  dispersed  situation  of  the  different 


COLONIAL  POLICY  OF  EUROPE . 


15 


traders  render  it  impossible  for  them  to  enter  into  any  gen¬ 
eral  combination,  and  their  competition  is  sufficient  to  hinder 
them  from  making  very  exorbitant  profits.  Under  so  liberal  a 
policy  the  colonies  are  enabled  both  to  sell  their  own  produce 
and  to  buy  the  goods  of  Europe  at  a  reasonable  price.  But 
since  the  dissolution  of  the  Plymouth  company,  when  our  col¬ 
onies  were  but  in  their  infancy,  this  has  always  been  the  pol¬ 
icy  of  England.  It  has  generally  too  been  that  of  France,  and 
has  been  uniformly  so  since  the  dissolution  of  what,  in  Eng¬ 
land,  is  commonly  called  their  Mississippi  company.  The 
profits  of  the  trade,  therefore,  which  France  and  England 
carry  on  with  their  colonies,  though  no  doubt  somewhat 
higher  than  if  the  competition  was  free  to  all  other  nations, 
are,  however,  by  no  means  exorbitant ;  and  the  price  of  Eu¬ 
ropean  goods  accordingly  is  not  extravagantly  high  in  the 
greater  part  of  the  colonies  of  either  of  those  nations. 

In  the  exportation  of  their  own  surplus  produce  too,  it  is 
only  with  regard  to  certain  commodities  that  the  colonies  of 
Great  Britain  are  confined  to  the  market  of  the  mother  coun¬ 
try.  These  commodities,  having  been  enumerated  in  the  act 
of  navigation  and  in  some  other  subsequent  acts,  have  upon 
that  account  been  called  enumerated  commodities.  The  rest 
are  called  non-enumerated;  and  may  be  exported  directly  to 
other  counties,  provided  it  is  in  British  or  Plantation  ships, 
of  which  the  owners  and  three  fourths  of  the  mariners  are 
British  subjects. 

Among  the  non-enumerated  commodites  are  some  of  the 
most  important  productions  of  America  and  the  West  Indies : 
grain  of  all  sorts,  lumber,  salt  provisions,  fish,  sugar,  and 
rum. 

Grain  is  naturally  the  first  and  principal  object  of  the 
culture  of  all  new  colonies.  By  allowing  them  a  very  exten¬ 
sive  market  for  it,  the  law  encourages  them  to  extend  this 
culture  much  beyond  the  consumption  of  a  thinly  inhabited 
country,  and  thus  to  provide  beforehand  an  ample  subsist¬ 
ence  for  a  continually  increasing  population. 

In  a  country  quite  covered  with  wood,  where  timber  conse¬ 
quently  is  of  little  or  no  value,  the  expense  of  clearing  the 


16 


ECONOMIC  HISTORY . 


ground  is  the  principal  obstacle  to  improvement.  By  allow¬ 
ing  the  colonics  a  very  extensive  market  for  their  lumber,  the 
law  endeavors  to  facilitate  improvement  by  raising  the  price 
of  a  commodity  which  would  otherwise  be  of  little  value,  and 
thereby- enabling  them  to  make  some  profit  of  what  would 
otherwise  be  mere  expense. 

In  a  country  neither  half-peopled  nor  half-cultivated,  cattle 
naturally  multiply  beyond  the  consumption  of  the  inhabi¬ 
tants,  and  are  often  upon  that  account  of  little  or  no  value. 
But  it  is  necessary,  it  has  already  been  shown,  that  the  price 
of  cattle  should  bear  a  certain  proportion  to  that  of  corn 
before  the  greater  part  of  the  lands  of  any  country  can  be 
improved.  By  allowing  to  American  cattle,  in  all  shapes, 
dead  and  alive,  a  very  extensive  market,  the  law  endeavors  to 
raise  the  value  of  a  commodity  of  which  the  high  price  is  so 
very  essential  to  improvement.  The  good  effects  of  this 
liberty,  however,  must  be  somewhat  diminished  by  the  4th 
of  George  III.,  c.  15,  which  puts  hides  and  skins  among  the 
enumerated  commodities,  and  thereby  tends  to  reduce  the 
valuation  of  American  cattle. 

To  increase  the  shipping  and  naval  power  of  Great 
Britain  by  the  extension  of  the  fisheries  of  our  colonies  is 
an  object  which  the  legislature  seems  to  have  had  almost 
constantly  in  view.  Those  fisheries  upon  this  account  have 
had  all  the  encouragement  which  freedom  can  give  them,  and 
they  have  flourished  accordingly.  The  New  England  fishery 
in  particular  was,  before  the  late  disturbances,  one  of  the 
most  important,  perhaps,  in  the  world.  The  whale-fishery, 
which,  notwithstanding  an  extravagant  bounty,  is  in  Great 
Britain  carried  on  to  so  little  purpose  that,  in  the  opinion 
of  many  people  (which  I  do  not,  however,  pretend  to  war¬ 
rant),  the  whole  produce  does  not  much  exceed  the  value  of 
the  bounties  which  are  annually  paid  for  it,  is  in  New  Eng¬ 
land  carried  on  without  any  bounty  to  a  very  great  extent. 
Fish  is  one  of  the  principal  articles  with  which  the  North 
Americans  trade  to  Spain,  Portugal,  and  the  Mediterranean. 

Sugar  was  originally  an  enumerated  commodity  which 
could  be  exported  only  to  Great  Britian.  But  in  1731,  upon 


COLONIAL  POLICY  OF  EUROPE. 


IT 


a  representation  of  the  sugar-planters,  its  exportation  was 
permitted  to  all  parts  of  the  world.  The  restrictions,  how¬ 
ever,  with  which  this  liberty  was  granted,  joined  to  the  high 
price  of  sugar  in  Great  Britain,  have  rendered  it  in  a  great 
measure  ineffectual.  Great  Britain  and  her  colonies  still 
continue  to  be  almost  the  sole  market  for  all  the  sugar  pro¬ 
duced  in  the  British  plantations.  Their  consumption  in¬ 
creases  so  fast  that,  though  in  consequence  of  the  increasing 
improvement  of  Jamaica,  as  well  as  of  the  Ceded  Islands, 
the  importation  of  sugar  has  increased  very  greatly  within 
these  twenty  years,  the  exportation  to  foreign  countries  is 
said  to  be  not  much  greater  than  before. 

Rum  is  a  very  important  article  in  the  trade  which  the 
Americans  carry  on  to  the  coast  of  Africa,  from  which  they 
bring  back  negro  slaves  in  return. 

If  the  whole  surplus  produce  of  America  in  grain  of  all 
sorts,  in  salt  provisions,  and  in  fish,  had  been  put  into  the 
enumeration,  and  thereby  forced  into  the  market  of  Great 
Britain,  it  would  have  interfered  too  much  with  the  produce 
of  the  industry  of  our  own  people.  It  was  probably  not  so 
much  from  any  regard  to  the  interest  of  America,  as  from 
a  jealousy  of  this  interference,  that  those  important  com¬ 
modities  have  not  only  been  kept  out  of  the  enumeration, 
but  that  the  importation  into  Great  Britain  of  all  grain,  ex¬ 
cept  rice,  and  of  all  salt  provisions,  has,  in  the  ordinary 
state  of  the  law,  been  prohibited. 

The  non-enumerated  commodities  could  originally  be  ex¬ 
ported  to  all  parts  of  the  world.  Lumber  and  rice,  hav¬ 
ing  been  once  put  into  the  enumeration,  when  they  were 
afterwards  taken  out  of  it  were  confined,  as  to  the  European 
market,  to  the  countries  that  lie  south  of  Cape  Finisterre. 
By  the  6th  of  George  III.,  c.  52,  all  non-enumerated  com¬ 
modities  were  subjected  to  the  like  restriction.  The  parts  of 
Europe  which  lie  south  of  Cape  Finisterre  are  not  manufac¬ 
turing  countries,  and  we  were  less  jealous  of  the  colony  ships 
carrying  home  from  them  any  manufactures  which  could 
interfere  with  our  own. 

The  enumerated  commodities  are  of  two  sorts :  first,  such 

2 


18 


ECONOMIC  HISTORY. 


as  are  either  the  peculiar  produce  of  America,  or  as  cannot 
be  produced,  or  at  least  are  not  produced,  in  the  mother 
country.  Of  this  kind  are  molasses,  coffee,  cocoanuts,  to¬ 
bacco,  pimento,  ginger,  whale-fins,  raw  silk,  cotton-wool, 
beaver  ^and  other  peltry  of  America,  indigo,  fustic,  and 
other  dyeing  woods.  Secondly,  such  as  are  not  the  peculiar 
produce  of  America,  but  which  are  and  may  be  produced  in 
the  mother  country,  though  not  in  such  quantities  as  to  sup¬ 
ply  the  greater  part  of  her  demand,  which  is  principally  sup¬ 
plied  from  foreign  countries.  Of  this  kind  are  all  naval 
stores,  masts,  yards,  and  bowsprits,  tar,  pitch,  and  turpen¬ 
tine,  pig  and  bar  iron,  copper  ore,  hides  and  skins,  pot  and 
pearl  ashes.  The  largest  importation  of  commodities  of  the 
first  kind  could  not  discourage  the  growth  or  interfere  with 
the  sale  of  any  part  of  the  produce  of  the  mother  country. 
By  confining  them  to  the  home  market,  our  merchants,/ it 
was  expected,  would  not  only  be  enabled  to  buy  them  cheaper 
in  the  Plantations,  and  consequently  to  sell  them  with  a 
better  profit  at  home,  but  to  establish  between  the  Planta¬ 
tions  and  foreign  countries  an  advantageous  carrying  trade, 
of  which  Great  Britain  was  necessarily  to  be  the  centre  or 
emporium,  as  the  European  country  into  which  those  com¬ 
modities  were  first  to  be  imported.  The  importation  of 
commodities  of  the  second  kind  might  be  so  managed  too,  it 
was  supposed,  as  to  interfere,  not  with  the  sale  of  those  of 
the  same  kind  which  were  produced  at  home,  but  with  that 
of  those  which  were  imported  from  foreign  countries;  be¬ 
cause,  by  means  of  proper  duties,  they  might  be  rendered 
always  somewhat  dearer  than  the  former,  and  yet  a  good 
deal  cheaper  than  the  latter.  By  confining  such  commod¬ 
ities  to  the  home  market,  therefore,  it  was  proposed  to  dis¬ 
courage  the  produce,  not  of  Great  Britain,  but  of  some 
foreign  countries  with  which  the  balance  of  trade  was  be¬ 
lieved  to  be  unfavorable  to  Great  Britain. 

The  prohibition  of  exporting  from  the  colonies  to  any 
other  country  but  Great  Britain  masts,  yards,  and  bow¬ 
sprits,  tar,  pitch,  and  turpentine  naturally  tended  to  lower 
the  price  of  timber  in  the  colonies,  and  consequently  to  in- 


COLONIAL  POLICY  OF  EUROPE. 


19 


crease  the  expense  of  clearing  their  lands,  the  principal 
obstacle  to  their  improvement.  But  about  the  beginning  of 
the  present  century,  in  1703,  the  pitch  and  tar  company  of 
Sweden  endeavored  to  raise  the  price  of  their  commodities 
to  Great  Britain  by  prohibiting  their  exportation,  except  in 
their  own  ships,  at  their  own  price,  and  in  such  quantities  as 
they  thought  proper.  In  order  to  counteract  this  notable 
piece  of  mercantile  policy,  and  to  render  herself  as  much  as 
possible  independent,  not  only  of  Sweden,  but  of  all  the  other 
northern  powers,  Great  Britain  gave  a  bounty  upon  the  im¬ 
portation  of  naval  stores  from  America,  and  the  effect  of 
this  bounty  was  to  raise  the  price  of  timber  in  America 
much  more  than  the  confinement  to  the  home  market  could 
lower  it;  and  as  both  regulations  were  enacted  at  the  same 
time,  their  joint  effect  was  rather  to  encourage  than  to  dis¬ 
courage  the  clearing  of  land  in  America. 

Though  pig  and  bar  iron  too  have  been  put  among  the 
enumerated  commodities,  yet  as,  when  imported  from  Amer¬ 
ica,  they  are  exempted  from  considerable  duties  to  which 
they  are  subject  when  imported  from  any  other  country,  the 
one  part  of  the  regulation  contributes  more  to  encourage  the 
erection  of  furnaces  in  America,  than  the  other  to  discourage 
it.  There  is  no  manufacture  which  occasions  so  great  a  con¬ 
sumption  of  wood  as  a  furnace,  or  which  can  contribute  so 
much  to  the  clearing  of  a  country  overgrown  with  it. 

The  tendency  of  some  of  these  regulations  to  raise  the 
value  of  timber  in  America,  and  thereby  to  facilitate  the 
clearing  of  the  land,  was  neither,  perhaps,  intended  nor 
understood  by  the  legislature.  Though  their  beneficial 
effects,  however,  have  been  in  this  respect  accidental,  they 
have  not  upon  that  account  been  less  real. 

The  most  perfect  freedom  of  trade  is  permitted  between 
the  British  colonies  of  America  and  the  West  Indies,  both 
in  the  enumerated  and  in  the  non-enumerated  commodities. 
Those  colonies  are  now  become  so  populous  and  thriving 
that  each  of  them  finds  in  some  of  the  others  a  great  and  ex¬ 
tensive  market  for  every  part  of  its  produce.  All  of  them 
taken  together,  they  make  a  great  internal  market  for  the 
produce  of  one  another. 


20 


ECONOMIC  HISTORY. 


The  liberality  of  England,  however,  towards  the  trade  of 
her  colonies  has  been  confined  chiefly  to  what  concerns  the 
market  for  their  produce,  either  in  its  rude  state,  or  in  what 
may  be  called  the  very  first  stage  of  manufacture.  The  more 
advanced  or  more  refined  manufactures  even  of  the  colony 
produce,  the  merchants  and  manufacturers  of  Great  Britain 
choose  to  reserve  to  themselves,  and  have  prevailed  upon  the 
legislature  to  prevent  their  establishment  in  the  colonies, 
sometimes  by  high  duties,  and  sometimes  by  absolute 
prohibitions.  * 

While,  for  example,  Muscovado  sugars  from  the  British 
plantations  pay  upon  importation  only  6s.  4 d.  the  hundred 
weight;  white  sugars  pay  XI,  Is.  Id.  ;  and  refined,  either 
double  or  single,  in  loaves,  X4,  2s.  5d.  When  those  high 
duties  were  imposed  Great  Britain  was  the  sole,  and  she 
still  continues  to  be  the  principal  market  to  which  the 
sugars  of  the  British  colonies  could  be  exported.  They 
amounted,  therefore,  to  a  prohibition,  at  first  of  claying  or 
refining  sugar  for  any  foreign  market,  and  at  present  of  clay¬ 
ing  or  refining  it  for  the  market,  which  takes  off,  perhaps, 
more  than  nine  tenths  of  the  whole  produce.  The  manufac¬ 
ture  of  claying  or  refining  sugar  accordingly,  though  it  has 
flourished  in  all  the  sugar  colonies  of  France,  has  been  little 
cultivated  in  any  of  those  of  England,  except  for  the  market 
of  the  colonies  themselves.  While  Grenada  was  in  the 
hands  of  the  French  there  was  a  refinery  of  sugar,  by  clay¬ 
ing  at  least,  upon  almost  every  plantation.  Since  it  fell 
into  those  of  the  English,  almost  all  works  of  this  kind  have 
been  given  up,  and  there  are  at  present,  October,  1773,  I  am 
assured,  not  above  two  or  three  remaining  in  the  island.  At 
present,  however,  by  an  indulgence  of  the  custom-house, 
clayed  or  refined  sugar,  if  reduced  from  loaves  into  powder, 
is  commonly  imported  as  Muscovado. 

While  Great  Britain  encourages  in  America  the  manufac¬ 
tures  of  pig  and  bar  iron,  by  exempting  them  from  duties 
to  which  the  like  commodities  are  subjected  when  imported 
from  any  other  country,  she  imposes  an  absolute  prohibition 
upon  the  erection  of  steel  furnaces  and  slit-mills  in  any  of 


COLONIAL  POLICY  OF  EUROPE. 


21 


her  American  plantations.  She  will  not  suffer  her  colonists 
to  work  in  those  more  refined  manufactures,  even  for  their 
own  consumption ;  but  insists  upon  their  purchasing  of  her 
merchants  and  manufacturers  all  goods  of  this  kind  which 
they  have  occasion  for. 

She  prohibits  the  exportation  from  one  province  to  another 
by  water,  and  even  the  carriage  by  land  upon  horseback  or 
in  a  cart,  of  hats,  of  wools  and  woollen  goods,  of  the  produce 
of  America,  —  a  regulation  which  effectually  prevents  the 
establishment  of  any  manufacture  of  such  commodities  for 
distant  sale,  and  confines  the  industry  of  her  colonists  in 
this  way  to  such  coarse  and  household  manufactures  as  a 
private  family  commonly  makes  for  its  own  use,  or  for  that 
of  some  of  its  neighbors  in  the  same  province. 

To  prohibit  a  great  people,  however,  from  making  all  that 
they  can  of  every  part  of  their  own  produce,  or  from  employ¬ 
ing  their  stock  and  industry  in  the  way  that  they  judge  most 
advantageous  to  themselves,  is  a  manifest  violation  of  the 
most  sacred  rights  of  mankind.  Unjust,  however,  as  such 
prohibitions  may  be,  they  have  not  hitherto  been  very  hurtful 
to  the  colonies.  Land  is  still  so  cheap,  and,  consequently, 
labor  so  dear  among  them,  that  they  can  import  from  the 
mother  country  almost  all  the  more  refined  or  more  advanced 
manufactures  cheaper  than  they  could  make  them  for  them¬ 
selves.  Though  they  had  not,  therefore,  been  prohibited 
from  establishing  such  manufactures,  yet  in  their  present 
state  of  improvement  a  regard  to  their  own  interest  would, 
probably,  have  prevented  them  from  doing  so.  In  their 
present  state  of  improvement  those  prohibitions,  perhaps, 
without  cramping  their  industry,  or  restraining  it  from  any 
employment  to  which  it  would  have  gone  of  its  own  accord, 
are  only  impertinent  badges  of  slavery  imposed  upon  them, 
without  any  sufficient  reason,  by  the  groundless  jealousy  of 
the  merchants  and  manufacturers  of  the  mother  country.  In 
a  more  advanced  state  they  might  be  really  oppressive  and 
insupportable. 

Great  Britain  too,  as  she  confines  to  her  own  market  some 
of  the  most  important  productions  of  the  colonies,  so  in 


22 


ECONOMIC  HISTORY. 


compensation  she  gives  to  some  of  them  an  advantage  in  that 
market;  sometimes  by  imposing  higher  duties  upon  the  like 
productions  when  imported  from  other  countries,  and  some¬ 
times  by  giving  bounties  upon  their  importation  from  the 
colonies'".  In  the  first  way  she  gives  an  advantage  in  the 
home  market  to  the  sugar,  tobacco,  and  iron  of  her  own 
colonies,  and  in  the  second  to  their  raw  silk,  to  their  hemp 
and  flax,  to  their  indigo,  to  their  naval  stores,  and  to  their 
building-timber.  This  second  way  of  encouraging  the  colony 
produce,  by  bounties  upon  importation,  is,  so  far  as  I  have 
been  able  to  learn,  peculiar  to  Great  Britain.  The  first  is 
not.  Portugal  does  not  content  herself  with  imposing  higher 
duties  upon  the  importation  of  tobacco  from  any  other  coun¬ 
try,  but  prohibits  it  under  the  severest  penalties. 

With  regard  to  the  importation  of  goods  from  Europe, 
England  has  likewise  dealt  more  liberally  with  her  colonies 
than  any  other  nation. 

Great  Britain  allows  a  part,  almost  always  the  half,  gener¬ 
ally  a  larger  portion,  and  sometimes  the  whole  of  the  duty 
which  is  paid  upon  the  importation  of  foreign  goods,  to  be 
drawn  back  upon  their  exportation  to  any  foreign  country. 
No  independent  foreign  country,  it  was  easy  to  foresee,  would 
receive  them  if  they  came  to  it  loaded  with  the  heavy  duties 
to  which  almost  all  foreign  goods  are  subjected  on  their  im¬ 
portation  into  Great  Britain.  Unless,  therefore,  some  part 
of  those  duties  was  drawn  back  upon  exportation,  there  was 
an  end  of  the  carrying  trade,  —  a  trade  so  much  favored  by 
the  mercantile  system. 

Our  colonies,  however,  are  by  no  means  independent  for¬ 
eign  countries;  and  Great  Britain,  having  assumed  to  her¬ 
self  the  exclusive  right  of  supplying  them  with  all  goods 
from  Europe,  might  have  forced  them  (in  the  same  manner 
as  other  countries  have  done  their  colonies)  to  receive  such 
goods  loaded  with  all  the  same  duties  which  they  paid  in  the 
mother  country.  But,  on  the  contrary,  till  1763,  the  same 
drawbacks  were  paid  upon  the  exportation  of  the  greater  part 
of  foreign  goods  to  our  colonies  as  to  any  independent  for¬ 
eign  country.  In  1763,  indeed,  by  the  4th  of  George  III., 


COLONIAL  POLICY  OF  EUROPE. 


23 


c.  15,  this  indulgence  was  a  good  deal  abated,  and  it  was 
enacted,  “That  no  part  of  the  duty  called  the  old  subsidy 
should  be  drawn  back  for  any  goods  of  the  growth,  produc¬ 
tion,  or  manufacture  of  Europe  or  the  East  Indies,  which 
should  be  exported  from  this  kingdom  to  any  British  colony 
or  plantation  in  America ;  wines,  white  calicoes,  and  muslins 
excepted.  ”  Before  this  law  many  different  sorts  of  foreign 
goods  might  have  been  bought  cheaper  in  the  plantations 
than  in  the  mother  country ;  and  some  may  still. 

Of  the  greater  part  of  the  regulations  concerning  the 
colony  trade,  the  merchants  who  carry  it  on,  it  must  be  ob¬ 
served,  have  been  the  principal  advisers.  We  must  not 
wonder,  therefore,  if,  in  the  greater  part  of  them,  their  in¬ 
terest  has  been  more  considered  than  either  that  of  the 
colonies  or  that  of  the  mother  country.  In  their  exclusive 
privilege  of  supplying  the  colonies  with  all  the  goods  which 
they  wanted  from  Europe,  and  of  purchasing  all  such  parts 
of  their  surplus  produce  as  could  not  interfere  with  any  of 
the  trades  which  they  themselves  carried  on  at  home,  the  in¬ 
terest  of  the  colonies  was  sacrificed  to  the  interest  of  those 
merchants.  In  allowing  the  same  drawbacks  upon  the  re¬ 
exportation  of  the  greater  part  of  European  and  East  India 
goods  to  the  colonies,  as  upon  their  re-exportation  to  any 
independent  country,  the  interest  of  the  mother  country  was 
sacrificed  to  it,  even  according  to  the  mercantile  ideas  of 
that  interest.  It  was  for  the  interest  of  the  merchants  to  pay 
as  little  as  possible  for  the  foreign  goods  which  they  sent  to 
the  colonies,  and  consequently,  to  get  back  as  much  as  pos¬ 
sible  of  the  duties  which  they  advanced  upon  their  importa¬ 
tion  into  Great  Britain.  They  might  thereby  be  enabled  to 
sell  in  the  colonies,  either  the  same  quantity  of  goods  with 
a  greater  profit,  or  a  greater  quantity  with  the  same  profit, 
and,  consequently,  to  gain  something  either  in  the  one  way 
or  the  other.  It  was  likewise  for  the  interest  of  the  colonies 
to  get  all  such  goods  as  cheap  and  in  as  great  abundance  as 
possible.  But  this  might  not  always  be  for  the  interest  of 
the  mother  country.  She  might  frequently  suffer  both  in 
her  revenue,  by  giving  back  a  great  part  of  the  duties  which 


24 


ECONOMIC  HISTORY. 


had  been  paid  upon  the  importation  of  such  goods ;  and  in 
her  manufactures,  by  being  undersold  in  the  colony  market, 
in  consequence  of  the  easy  terms  upon  which  foreign  manu¬ 
factures  could  be  carried  thither  by  means  of  those  draw¬ 
backs.  -  The  progress  of  the  linen  manufacture  of  Great 
Britain,  it  is  commonly  said,  has  been  a  good  deal  retarded 
by  the  drawbacks  upon  the  re-exportation  of  German  linen  to 
the  American  colonies. 

But  though  the  policy  of  Great  Britain  with  regard  to  the 
trade  of  her  colonies  has  been  dictated  by  the  same  mercan¬ 
tile  spirit  as  that  of  other  nations,  it  has,  however,  upon  the 
whole,  been  less  illiberal  and  oppressive  than  that  of  any  of 
them. 

In  everything,  except  their  foreign  trade,  the  liberty  of 
the  English  colonists  to  manage  their  own  affairs  their  own 
way  is  complete.  It  is  in  every  respect  equal  to  that  of 
their  fellow-citizens  at  home,  and  is  secured  in  the  same 
manner,  by  an  assembly  of  the  representatives  of  the  people, 
who  claim  the  sole  right  of  imposing  taxes  for  the  support  of 
the  colony  government.  The  authority  of  this  assembly 
overawes  the  executive  power,  and  neither  the  meanest  nor 
the  most  obnoxious  colonist,  as  long  as  he  obeys  the  law, 
has  anything  to  fear  from  the  resentment,  either  of  the  gov¬ 
ernor,  or  of  any  other  civil  or  military  officer  in  the  province. 
The  colony  assemblies,  though,  like  the  house  of  commons  in 
England,  they  are  not  always  a  very  equal  representation  of 
the  people,  yet  they  approach  more  nearly  to  that  character; 
and  as  the  executive  power  either  has  not  the  means  to  cor¬ 
rupt  them,  or,' on  account  of  the  support  which  it  receives 
from  the  mother  country,  is  not  under  the  necessity  of  doing 
so,  they  are  perhaps  in  general  more  influenced  by  the  incli¬ 
nations  of  their  constituents.  The  councils,  which,  in  the 
colony  legislatures,  correspond  to  the  house  of  lords  in  Great 
Britain,  are  not  composed  of  an  hereditary  nobility.  In 
some  of  the  colonies,  as  in  three  of  the  governments  of  New 
England,  those  councils  are  not  appointed  by  the  king,  but 
chosen  by  the  representatives  of  the  people.  In  none  of  the 
English  colonies  is  there  any  hereditary  nobility.  In  all  of 


COLONIAL  POLICY  OF  EUROPE. 


25 


them,  indeed,  as  in  all  other  free  countries  the  descendant 
of  an  old  colony  family  is  more  respected  than  an  upstart  of 
equal  merit  and  fortune ;  but  he  is  only  more  respected,  and 
he  has  no  privileges  by  which  he  can  be  troublesome  to  his 
neighbors.  Before  the  commencement  of  the  present  dis¬ 
turbances,  the  colony  assemblies  had  not  only  the  legislative, 
but  a  part  of  the  executive  power.  In  Connecticut  and 
Rhode  Island  they  elected  the  governor.  In  the  other  colo¬ 
nies  they  appointed  the  revenue  officers  who  collected  the 
taxes  imposed  by  those  respective  assemblies,  to  whom  those 
officers  were  immediately  responsible.  There  is  more  equal¬ 
ity,  therefore,  among  the  English  colonists  than  among  the 
inhabitants  of  the  mother  country.  Their  manners  are  more 
republican,  and  their  governments,  those  of  three  of  the 
provinces  of  New  England  in  particular,  have  hitherto  been 
more  republican  too. 

The  absolute  governments  of  Spain,  Portugal,  and  France, 
on  the  contrary,  take  place  in  their  colonies;  and  the  dis¬ 
cretionary  powers  which  such  governments  commonly  dele¬ 
gate  to  all  their  inferior  officers  are,  on  account  of  the  great 
distance,  naturally  exercised  there  with  more  than  ordinary 
violence.  Under  all  absolute  governments  there  is  more 
liberty  in  the  capital  than  in  any  other  part  of  the  country. 
The  sovereign  himself  can  never  have  either  interest  or  in¬ 
clination  to  pervert  the  order  of  justice,  or  to  oppress  the 
great  body  of  the  people.  In  the  capital  his  presence  over¬ 
awes  more  or  less  all  his  inferior  officers,  who  in  the  remoter 
provinces,  from  whence  the  complaints  of  the  people  are  less 
likely  to  reach  him,  can  exercise  their  tyranny  with  much 
more  safety.  But  the  European  colonies  in  America  are 
more  remote  than  the  most  distant  provinces  of  the  greatest 
empires  which  had  ever  been  known  before.  The  govern¬ 
ment  of  the  English  colonies  is  perhaps  the  only  one  which, 
since  the  world  began,  could  give  perfect  security  to  the  in¬ 
habitants  of  so  very  distant  a  province.  The  administration 
of  the  French  colonies,  however,  has  always  been  conducted 
with  more  gentleness  and  moderation  than  that  of  the  Span¬ 
ish  and  Portuguese.  This  superiority  of  conduct  is  suitable 


26 


/ 


ECONOMIC  HISTORY. 


both  to  the  character  of  the  French  nation,  and  to  wliat 
forms  the  character  of  every  nation,  the  nature  of  their  gov¬ 
ernment,  which,  though  arbitrary  and  violent  in  comparison 
with  that  of  Great  Britain,  is  legal  and  free  in  comparison 
with  those  of  Spain  and  Portugal. 

It  is  in  the  progress  of  the  North  American  colonies,  how¬ 
ever,  that  the  superiority  of  the  English  policy  chiefly 
appears.  The  progress  of  the  sugar  colonies  of  France  has 
been  at  least  equal,  perhaps  superior,  to  that  of  the  greater 
part  of  those-of  England;  and  yet  the  sugar  colonies  of  Eng¬ 
land  enjoy  a  free  government  nearly  of  the  same  kind  with 
that  which  takes  place  in  her  colonies  of  North  America. 
But  the  sugar  colonies  of  France  are  not  discouraged,  like 
those  of  England,  from  refining  their  own  sugar;  and,  what 
is  of  still  greater  importance,  the  genius  of  their  government 
naturally  introduces  a  better  management  of  their  negro 
slaves. 

In  all  European 'colonies  the  culture  of  the  sugar-cane  is 
carried  on  by  negro  slaves.  The  constitution  of  those  who 
have  been  born  in  the  temperate  climate  of  Europe  could  not, 
it  is  supposed,  support  the  labor  of  digging  the  ground  under 
the  burning  sun  of  the  West  Indies;  and  the  culture  of  the 
sugar-cane,  as  it  is  managed  at  present,  is  all  hand  labor, 
though,  in  the  opinion  of  many,  the  drill  plough  might  be 
introduced  into  it  with  great  advantage.  But,  as  the  profit 
and  success  of  the  cultivation  which  is  carried  on  by  means 
of  cattle  depend  very  much  upon  the  good  management  of 
those  cattle,  so  the  profit  and  success  of  that  which  is  car¬ 
ried  on  by  slaves  must  depend  equally  upon  the  good  man¬ 
agement  of  those  slaves;  and  in  the  good  management  of 
their  slaves  the  French  planters,  I  think  it  is  generally 
allowed,  are  superior  to  the  English.  The  law,  so  far  as  it 
gives  some  weak  protection  to  the  slave  against  the  violence 
of  his  master,  is  likely  to  be  better  executed  in  a  colony 
where  the  government  is  in  a  great  measure  arbitrary  than 
in  one  where  it  is  altogether  free.  In  every  country  where 
the  unfortunate  law  of  slavery  is  established,  the  magistrate, 
when  he  protects  the  slave,  intermeddles  in  some  measure  in 


s 


COLONIAL  POLICY  OF  EUROPE . 


27 


the  management  of  the  private  property  of  the  master ;  and 
in  a  free  country,  where  the  master  is  perhaps  either  a  mem¬ 
ber  of  the  colony  assembly  or  an  elector  of  such  a  member, 
he  dare  not  do  this  but  with  the  greatest  caution  and  circum¬ 
spection.  The  respect  which  he  is  obliged  to  pay  to  the 
master  renders  it  more  difficult  for  him  to  protect  the  slave. 
But  in  a  country  where  the  government  is  in  a  great  measure 
arbitrary,  where  it  is  usual  for  the  magistrate  to  intermeddle 
even  in  the  management  of  the  private  property  of  individ¬ 
uals,  and  to  send  them,  perhaps,  a  lettre  de  cachet  if  they  do 
not  manage  it  according  to  his  liking,  it  is  much  easier  for 
him  to  give  some  protection  to  the  slave ;  and  common  hu¬ 
manity  naturally  disposes  him  to  do  so.  The  protection  of 
the  magistrate  renders  the  slave  less  contemptible  in  the 
eyes  of  his  master,  who  is  thereby  induced  to  consider  him 
with  more  regard,  and  to  treat  him  with  more  gentleness. 
Gentle  usage  renders  the  slave  not  only  more  faithful,  but 
more  intelligent,  and  therefore,  upon  a  double  account,  more 
useful.  He  approaches  more  to  the  condition  of  a  free  ser¬ 
vant,  and  may  possess  some  degree  of  integrity  and  attach¬ 
ment  to  his  master’s  interest, —  virtues  which  frequently 
belong  to  free  servants,  but  which  never  can  belong  to  a 
slave  who  is  treated  as  slaves  commonly  are  in  countries 
where  the  master  is  perfectly  free  and  secure. 

That  the  condition  of  a  slave  is  better  under  an  arbitrary 
than  under  a  free  government  is,  I  believe,  supported  by  the 
history  of  all  ages  and  nations.  In  the  Roman  history,  the 
first  time  we  read  of  the  magistrate  interposing  to  protect 
the  slave  from  the  violence  of  his  master  is  under  the  em¬ 
perors.  When  Vedius  Pollio,  in  the  presence  of  Augustus, 
ordered  one  of  his  slaves,  who  had  committed  a  slight  fault, 
to  be  cut  into  pieces,  and  thrown  into  his  fish-pond  in  order 
to  feed  his  fishes,  the  emperor  commanded  him,  with  indig¬ 
nation,  to  emancipate  immediately,  not  only  that  slave,  but 
all  the  others  that  belonged  to  him.  Under  the  republic  no 
magistrate  could  have  had  authority  enough  to  protect  the 
slave,  much  less  to  punish  the  master. 

The  stock,  it  is  to  be  observed,  which  has  improved  the 


28 


ECONOMIC  HISTORY. 


sugar  colonies  of  France,  particularly  the  great  colony  of  St. 
Domingo,  has  been  raised  almost  entirely  from  the  gradual 
improvement  and  cultivation  of  those  colonies.  It  has  been 
almost  altogether  the  produce  of  the  soil  and  of  the  industry 
of  the  colonists,  or,  what  comes  to  the  same  thing,  the  price 
of  that  produce,  gradually  accumulated  by  good  management, 
and  employed  in  raising  a  still  greater  produce.  But  the 
stock  which  has  improved  and  cultivated  the  sugar  colonies 
of  England  has,  a  great  part  of  it,  been  sent  out  from  Eng¬ 
land,  and  has  by  no  means  been  altogether  the  produce  of 
the  soil  and  industry  of  the  colonists.  The  prosperity  of  the 
English  sugar  colonies  has  been,  in  a  great  measure,  owing 
to  the  great  riches  of  England,  of  which  a  part  has  over¬ 
flowed,  if  one  may  say  so,  upon  those  colonies.  But  the 
prosperity  of  the  sugar  colonies  of  France  has  been  entirely 
owing  to  the  good  conduct  of  the  colonists,  which  must  there¬ 
fore  have  had  some  superiority  over  that  of  the  English;  and 
this  superiority  has  been  remarked  in  nothing  so  much  as  in 
the  good  management  of  their  slaves. 

Such  have  been  the  general  outlines  of  the  policy  of  the 
different  European  nations  with  regard  to  their  colonies. 

The  policy  of  Europe,  therefore,  has  very  little  to  boast  of, 
either  in  the  original  establishment,  or.  so  far  as  concerns 
their  internal  government,  in  the  subsequent  prosperity  of 
the  colonies  of  America. 

Folly  and  injustice  seem  to  have  been  the  principles  which 
presided  over  and  directed  the  first  project  of  establishing 
those  colonies;  the  folly  of  hunting  after  gold  and  silver 
mines,  and  the  injustice  of  coveting  the  possession  of  a  coun¬ 
try  whose  harmless  natives,  far  from  having  ever  injured  the 
people  of  Europe,  had  received  the  first  adventurers  with 
every  mark  of  kindness  and  hospitality. 

The  adventurers,  indeed,  who  formed  some  of  the  later 
establishments,  joined  to  the  chimerical  project  of  finding 
gold  and  silver  mines  other  motives  more  reasonable  and 
more  laudable ;  but  even  these  motives  do  very  little  honor 
to  the  policy  of  Europe. 

The  English  Puritans,  restrained  at  home,  fled  for  free- 


COLONIAL  POLICY  OF  EUROPE. 


29 


dom  to  America,  and  established  there  the  four  governments 
of  New  England.  The  English  Catholics,  treated  with  much 
greater  injustice,  established  that  of  Maryland ;  the  Quakers, 
that  of  Pennsylvania.  The  Portuguese  J ews,  persecuted  by 
the  Inquisition,  stripped  of  their  fortunes,  and  banished  to 
Brazil,  introduced,  by  their  example,  some  sort  of  order 
and  industry  among  the  transported  felons  and  strumpets, 
by  whom  that  colony  was  originally  peopled,  and  taught 
them  the  culture  of  the  sugar-cane.  Upon  all  these  differ¬ 
ent  occasions,  it  was,  not  the  wisdom  and  policy,  but  the 
disorder  and  injustice,  of  the  European  governments,  which 
peopled  and  cultivated  America. 

In  effectuating  some  of  the  most  important  of  these  estab¬ 
lishments,  the  different  governments  of  Europe  had  as  little 
merit  as  in  projecting  them.  The  conquest  of  Mexico  was 
the  project,  not  of  the  council  of  Spain,  but  of  a  governor  of 
Cuba;  and  it  was  effectuated  by  the  spirit  of  the  bold  adven¬ 
turer  to  whom  it  was  entrusted,  in  spite  of  everything  which 
that  governor,  who  soon  repented  of  having  trusted  such  a 
person,  could  do  to  thwart  it.  The  conquerors  of  Chili  and 
Peru,  and  of  almost  all  the  other  Spanish  settlements  upon 
the  continent  of  America,  carried  out  with  them  no  other 
public  encouragement,  but  a  general  permission  to  make 
settlements  and  conquests  in  the  name  of  the  king  of  Spain. 
Those  adventures  were  all  at  the  private  risk  and  expense 
of  the  adventurers.  The  government  of  Spain  contributed 
scarce  anything  to  any  of  them.  That  of  England  contrib¬ 
uted  as  little  towards  effectuating  the  establishment  of  some 
of  its  most  important  colonies  in  North  America. 

When  those  establishments  were  effectuated,  and  had  be¬ 
come  so  considerable  as  to  attract  the  attention  of  the  mother 
country,  the  first  regulations  which  she  made  with  regard  to 
them  had  always  in  view  to  secure  to  herself  the  monopoly  of 
their  commerce, —  to  confine  their  market,  and  to  enlarge  her 
own  at  their  expense,  and,  consequently,  rather  to  damp  and 
discourage,  than  to  quicken  and  forward,  the  course  of  their 
prosperity.  In  the  different  ways  in  which  this  monopoly 
has  been  exercised,  consists  one  of  the  most  essential  differ- 


30 


ECONOMIC  HISTORY . 


ences  in  the  policy  of  the  different  European  nations  with 
regard  to  their  colonies.  The  best  of  them  all,  that  of  Eng¬ 
land,  is  only  somewhat  less  illiberal  and  oppressive  than 
that  of  any  of  the  rest. 

In  what  way,  therefore,  has  the  policy  of  Europe  contrib¬ 
uted  either  to  the  first  establishment  or  to  the  present 
grandeur  of  the  colonies  of  America  ?  In  one  way,  and  in 
one  way  only,  it  has  contributed  a  good  deal.  Magna  virum 
Mater!  It  bred  and  formed  the  men  who  were  capable  of 
achieving  such  great  actions,  and  of  laying  the  foundation  of 
so  great  an  empire;  and  there  is  no  other  quarter  of  the 
world  of  which  the  policy  is  capable  of  forming,  or  has  ever 
actually  and  in  fact  formed,  such  men.  The  colonies  owe  to 
the  policy  of  Europe  the  education  and  great  views  of  their 
active  and  enterprising  founders ;  and  some  of  the  greatest 
and  most  important  of  them,  so  far  as  concerns  their  internal 
government,  owe  to  it  scarce  anything  else. 


THE  GREAT  INVENTIONS. 


81 


II. 


THE  GREAT  INVENTIONS. 


From  Walpole’s  History  of  England,1  Yol.  I.  pp.  50-76. 
HE  manufacturing  industries  of  the  country  had  never 


A  previously  experienced  so  marvellous  a  development. 
The  hum  of  the  workshop  was  heard  in  places  which  had  pre¬ 
viously  only  been  disturbed  by  the  whirr  of  the  grouse ;  and 
new  forces,  undreamed  of  a  century  before,  were  employed  to 
assist  the  progress  of  production.  The  trade  of  the  United 
Kingdom  acquired  an  importance  which  it  had  never  pre¬ 
viously  enjoyed,  and  the  manufacturing  classes  obtained  an 
influence  which  they  had  never  before  known.  The-  land- 
owners  were  slowly  losing  the  monopoly  of  power  which  they 
had  enjoyed  for  centuries.  Traders  and  manufacturers  were 
daily  obtaining  fresh  wealth  and  influence.  A  new  England 
was  supplanting  the  old  country;  and  agriculture,  the  sole 
business  of  our  forefathers,  was  gradually  becoming  of  less 
importance  than  trade.  In  1798,  the  first  year  of  the  war, 
the  official  value  of  all  the  imports  into  Britain  was  less  than 
<£20,000,000.  In  1815,  the  year  of  Waterloo,  it  exceeded 
£31,000,000.  In  1792  the  official  value  of  British  and  Irish 
exports  was  only  £18, 000, 000 ;  it  rose  in  1815  to  £41, 000, 000. 
The  official  values,  however,  give  only  a  very  imperfect  idea  of 
the  extent  of  our  export  trade.  They  are  based  on  prices  fixed 
so  far  back  as  1696,  and  afford,  therefore,  an  inaccurate  test 
of  the  extent  of  our  trade.  No  attempt  was  made  to  ascertain 
the  declared  or  real  value  of  the  exports  till  the  year  1798, 
when  it  slightly  exceeded  £33,000,000.  The  declared  value 
of  the  exports  of  British  and  Irish  produce  in  1815  exceeded 
£49,000,000.  The  rise  in  the  value  of  the  exports  and  im¬ 
ports  was  attributable  to  many  causes.  The  predominance 


1  London:  Longmans,  Green,  &  Co.,  1878. 


32 


ECONOMIC  HISTORY . 


of  the  British  at  sea  had  driven  every  enemy  from  the  ocean, 
and  had  enabled  British  merchants  to  ply  their  trade  in 
comparative  safety.  The  numerous  possessions  which  the 
British  had  acquired  in  every  quarter  of  the  globe  had  pro¬ 
vided  them  with  customers  in  all  parts  of  the  wrorld;  and 
the  most  civilized,  as  well  as  the  most  savage,  of  nations 
were  purchasing  the  produce  of  the  looms  of  Manchester  and 
of  the  factories  of  Birmingham.  Even  the  taxation  which  the 
war  had  necessitated  had  stimulated  the  manufacturers  to 
fresh  exertions.  The  merchants  were  continually  discover¬ 
ing  fresh  outlets  for  British  trade ;  the  manufacturers  were 
constantly  encouraged  to  increase  their  produce.1 

Wool  was  the  most  ancient  and  most  important  of  English 
manufactures.  Custom  seemed  to  point  to  the  permanent 
superiority  of  the  woollen  trade.  The  Chancellor  of  Eng¬ 
land  sat  on  a  sack  of  wool;  and  when  men  spoke  of  the 
staple  trade,  they  always  referred  to  the  trade  in  wool.  For 
centuries  British  sovereigns  and  British  statesmen  had,  after 
their  own  fashion,  and  according  to  their  own  ideas,  actively 
promoted  this  particular  industry.  Edward  III.  had  induced 
Flemish  weavers  to  settle  in  this  country.  The  Restoration 
Parliament  prohibited  the  exportation  of  British  wool,  and 
had  ordered  that  the  very  dead  should  be  interred  in  woollen 
shrouds.  The  manufacturers  spread  over  the  entire  king¬ 
dom.  Wherever  there  was  a  running  stream  to  turn  their 
mill,  there  was  at  any  rate  the  possibility  of  a  woollen  fac¬ 
tory.  Norwich,  with  its  contiguous  village  of  Worsted,  was 
the  chief  seat  of  the  trade.  But  York  and  Bradford,  Worces¬ 
tershire  and  Gloucestershire,  Manchester  and  Kendal,  were 
largely  dependent  on  it. 

The  steps  which  Parliament  took  to  promote  this  particu¬ 
lar  industry  were  not  always  very  wise ;  in  one  point  they 
were  not  very  just.  Ireland,  in  many  respects,  could  have 
competed  on  advantageous  terms  with  the  woollen  manufac¬ 
turers  of  England.  English  jealousy  prohibited  in  conse- 

1  McCulloch’s  “  Commercial  Dictionary,”  imports  and  exports ;  cf .,  however, 
Porter’s  “  Progress  of  the  Nation,”  p.  357,  where  the  figures  are  slightly  differ¬ 
ent.  Nothing  is  more  difficult  than  to  ascertain  the  correct  figures. 


THE  GREAT  INVENTIONS. 


33 


quence  the  importation  of  Irish  manufactured  woollen  goods. 
The  result  hardly  answered  the  sanguine  anticipations  of  the 
selfish  senators  who  had  secured  it.  The  Irish,  instead  of 
sending  their  fleeces  to  be  worked  up  in  Great  Britain, 
smuggled  them,  in  return  for  contraband  spirits,  to  France. 
England  failed  to  obtain  any  large  addition  to  her  raw  mate¬ 
rial  ;  and  Ireland  was  driven  into  closer  communication  with 
the  hereditary  foe  of  England.  The  loss  of  the  Irish  fleeces 
was  the  more  serious  from  another  cause.  The  home  supply 
of  wool  had  originally  been  abundant  and  good ;  but  its  pro¬ 
duction,  at  the  commencement  of  the  century,  was  not  in¬ 
creasing  as  rapidly  as  the  demand  for  it;  the  quality  of 
home  grown  wool  was  rapidly  deteriorating.  The  same 
sheep  do  not  produce  both  wool  and  mutton  in  the  greatest 
perfection.  Every  improvement  in  their  meat  is  effected  at 
the  cost  of  their  fleece.  English  mutton  was  better  than  it 
had  ever  been ;  but  English  manufacturers  were  compelled  to 
mix  foreign  with  native  wool.  Had  trade  been  free  this 
result  would  have  been  of  little  moment.  The  English  could 
have  easily  obtained  an  ample  supply  of  raw  material  from 
the  hills  of  Spain  and  other  countries.  But,  at  the  very 
time  at  which  foreign  wool  became  indispensable,  the  necessi¬ 
ties  of  the  country,  or  the  ignorance  of  her  financiers,  led  to 
the  imposition  of  a  heavy  import  duty  on  wool.  Addington, 
in  1802,  levied  a  duty  upon  it  of  5s.  3 d.  the  cwt.  ;  Yansittart, 
in  1813,  raised  the  tax  to  6s.  8 d.  The  folly  of  the  protec¬ 
tionists  had  done  much  to  ruin  the  wool  trade.  But  the  evil 
already  done  was  small  in  comparison  with  that  in  store. 

Notwithstanding,  however,  the  restrictions  on  the  wool 
trade,  the  woollen  industry  was  of  great  importance.  In 
1800,  Law,  as  counsel  to  the  manufacturers,  declared,  in  an 
address  to  the  house  of  lords,  that  600,000  packs  of  wool, 
worth  £6,600,000  were  produced  annually  in  England  and 
Wales,  and  that  1,500,000  persons  were  employed'  in  the 
manufacture.  But  these  figures,  as  McCulloch  has  shown, 
are  undoubtedly  great  exaggerations.1  Bather  more  than 

1  McCulloch,  ad  verb.  Wool;  Porter’s  “Progress  of  the  Nation,”  pp.  170- 
175. 


3 


34 


ECONOMIC  HISTORY. 


\ 


400,000  packs  of  wool  were  available  for  manufacturing  pur¬ 
poses  at  the  commencement  of  the  century ;  more  than  nine 
tenths  of  these  were  produced  at  home;  and  some  350,000 
or  400,000  persons  were  probably  employed  in  the  trade. 
The  gVeat  woollen  industry  still  deserved  the  name  of  our 
-staple  trade ;  but  it  did  not  merit  the  exaggerated  descrip¬ 
tions  which  persons  who  should  have  known  better  applied 
to  it. 

If  the  staple  trade  of  the  country  had  originally  been  in 
woollen  goods  at  the  commencement  of  the  present  century, 
cotton  was  rapidly  gaining  upon  wool.  Cotton  had  been 
used  in  the  extreme  East  and  in  the  extreme  West  from  the 
earliest  periods  of  which  we  have  any  records.  The  Span¬ 
iards,  on  their  discovery  of  America,  found  the  Mexicans 
clothed  in  cotton.  “There  are  trees,”  Herodotus  had  writ¬ 
ten,  nearly  two  thousand  years  before,  “which  grow  wild 
there  [in  India],  the  fruit  whereof  is  a  wool  exceeding  in 
beauty  and  goodness  that  of  sheep.  The  natives  make  their 
clothes  of  this  tree  wool.  ” 1  But  though  the  use  of  cotton 
had  been  known  from  the  earliest  ages,  both  in  India  and 
America,  no  cotton  goods  were  imported  into  Europe;  and 
in  the  ancient  world  both  rich  and  poor  were  clothed  in  silk, 
linen,  and  wool.  The  industrious  Moors  introduced  cotton 
into  Spain.  Many  centuries  afterwards  cotton  was  imported 
into  Italy,  Saxony,  and  the  Low  Countries.  Isolated  from 
the  rest  of  Europe,  with  little  wealth,  little  industry,  and  no 
roads ;  rent  by  civil  commotions,  —  the  English  were  the  last 
people  in  Europe  to  introduce  the  manufacture  of  cotton 
goods  into  their  own  homes. 

Towards  the  close  of  the  sixteenth  century,  indeed,  cotton 
goods  were  occasionally  mentioned  in  the  statute  book,  and 
the  manufacture  of  the  cottons  of  Manchester  was  regulated 
by  acts  passed  in  the  reigns  of  Henry  VIII.,  Edward  VI., 
and  Elizabeth.  But  there  seem  to  be  good  reasons  for  con¬ 
cluding  that  Manchester  cottons,  in  the  time  of  the  Tudors, 
were  woollen  goods,  and  did  not  consist  of  cotton  at  all. 

1  Rawlinson’s  “  Herodotus,”  vol.  ii.  p.  411.  The  German  name  for  cotton  is 
Baumwolle  —  tree  wool. 


THE  GREAT  INVENTIONS. 


35 


More  than  a  century  elapsed  before  any  considerable  trade  in  - 
cotton  attracted  the  attention  of  the  legislature.  The  woollen 
manufacturers  complained  that  people  were  dressing  their 
children  in  printed  cottons;  and  Parliament  was  actually 
persuaded  to  prohibit  the  introduction  of  Indian  printed 
calicoes.  Even  an  act  of  Parliament,  however,  was  unable 
to  extinguish  the  growing  taste  for  Indian  cottons.  The 
ladies,  according  to  the  complaint  of  an  old  writer,  expected 
“  to  do  what  they  please,  to  say  what  they  please,  and  wear 
what  they  please.”  The  taste  for  cotton  led  to  the  introduc¬ 
tion  of  calico-printing  in  London;  Parliament,  in  order  to 
encourage  the  new  trade,  was  induced  to  sanction  the  impor¬ 
tation  of  plain  cotton  cloths  from  India  under  a  duty.  The 
demand  which  was  thus  created  for  calicoes  probably  pro¬ 
moted  their  manufacture  at  home;  and  Manchester,  Bolton, 
Frome,  and  other  places,  gradually  acquired  fresh  vitality 
from  the  creation  of  a  new  industry. 

Many  years,  however,  passed  before  the  trade  attained 
anything  but  the  slenderest  proportions.  In  the  year  1697 
only  1,976,359  pounds  of  cotton  wool  were  imported  into  the 
United  Kingdom.  In  the  year  1751  only  2,976,610  pounds 
were  imported.  The  official  value  of  cotton  goods  exported 
amounted  in  the  former  year  to  only  <£5,915;  in  the  latter 
year  to  only  £45,986.  At  the  present  time  Britain  annually 
purchases  about  1,500,000,000  pounds  of  cotton  wool.  She 
annually  disposes  of  cotton  goods  worth  £60,000,000.  The 
import  trade  is  five  hundred  times  as  large  as  it  was  in 
1751;  the  value  of  the  exports  has  been  increased  1,300  fold. 
The  world  has  never  seen,  in  any  similar  period,  so  prodi¬ 
gious  a  growth  of  manufacturing  industry.  But  the  trade 
has  not  merely  grown  from  an  infant  into  a  giant;  its  con¬ 
ditions  have  been  concurrently  revolutionized.  Up  to  the 
middle  of  the  last  century  cotton  goods  were  really  never 
made  at  all.  The  so-called  cotton  manufactures  were  a 
combination  of  wool,  or  linen,  and  cotton.  No  Englishman 
had  been  able  to  produce  a  cotton  thread  strong  enough  for 
the  warp;  and  even  the  cotton  manufacturers  themselves 
appear  to  have  despaired  of  doing  so.  They  induced  Parlia- 


36 


ECONOMIC  HISTORY. 


ment  in  1736  to  repeal  the  prohibition  which  still  encum¬ 
bered  the  statute  book,  against  wearing  printed  calicoes ; 
but  the  repeal  was  granted  on  the  curious  condition  “that 
the  warp  thereof  be  entirely  linen  yarn.”  Parliament  no 
doubt  intended  by  this  condition  to  check  the  importation  of 
Indian  goods  without  interfering  with  the  home  manufac¬ 
turers.  The  superior  skill  of  the  Indian  manufacturers 
enabled  them  to  use  cotton  for  a  warp ;  while  clumsy  work¬ 
manship  made  the  use  of  cotton  as  a  warp  unattainable  at 
home. 

In  the  middle  of  the  eighteenth  century,  then,  a  piece  of 
cotton  cloth,  in  the  true  sense  of  the  term,  had  never  been 
made  in  England.  The  so-called  cotton  goods  were  all  made 
in  the  cottages  of  the  weavers.  The  yarn  was  carded  by 
hand ;  it  wras  spun  by  hand ;  it  was  worked  into  cloth  by  a 
hand-loom.  The  weaver  was  usually  the  head  of  the  family ; 
his  wife  and  unmarried  daughters  spun  the  yarn  for  him. 
Spinning  was  the  ordinary  occupation  of  every  girl,  and  the 
distaff  was,  for  countless  centuries,  the  ordinary  occupation 
of  every  woman.  The  occupation  was  so  universal  that  the 
distaff  was  occasionally  used  as  a  synonym  for  woman. 
“Le  royaume  de  France  ne  tombe  point  en  quenouille .  ” 

“  See  my  royal  master  murdered, 

His  crown  usurped,  a  distaff  in  the  throne.” 

*ff?- r  3Q  2*^. 

To  this  day  every  unmarried  girl  is  commonly  described  as 
a  “  spinster.  ” 

The  operation  of  weaving  was,  however,  much  more  rapid 
than  that  of  spinning.  The  weaver  consumed  more  weft 
than  his  own  family  could  supply  him  with;  and  the  weavers 
generally  experienced  the  greatest  difficulty  in  obtaining 
sufficient  yarn.  About  the  middle  of  the  eighteenth  century 
the  ingenuity  of  two  persons,  a  father  and  a  son,  made  this 
difference  more  apparent.  The  shuttle  had  originally  been 
thrown  by  the  hand  from  one  end  of  the  loom  to  the  other. 
John  Kay,  a  native  of  Bury,  by  his  invention  of  the  fly- 
shuttle,  saved  the  weaver  from  this  labor.  The  lathe  in 
which  the  shuttle  runs  was  lengthened  at  both  ends;  two 


THE  GREAT  INVENTIONS. 


37 


strings  were  attached  to  its  opposite  ends ;  the  strings  were 
held  by  a  peg  in  the  weaver’s  hands,  and  by  plucking  the 
peg  the  weaver  was  enabled  to  give  the  necessary  impulse 
to  the  shuttle.  Robert  Kay,  John  Kay’s  son,  added  the 
drop-box,  by  means  of  which  the  weaver  was  able  “to  use 
any  one  of  the  three  shuttles,  each  containing  a  different 
colored  weft,  without  the  trouble  of  taking  them  from  and 
replacing  them  in  the  lathe.  ”  By  means  of  these  inventions 
the  productive  power  of  each  weaver  was  doubled.  Each 
weaver  was  easily  able  to  perform  the  amount  of  work  which 
had  previously  required  two  men  to  do;  and  the  spinsters 
found  themselves  more  hopelessly  distanced  than  ever  in 
their  efforts  to  supply  the  weavers  with  weft. 

The  preparation  of  weft  was  entirely  accomplished  by 
manual  labor,  and  the  process  was  very  complicated.  Card¬ 
ing  and  roving  were  both  slowly  performed  with  the  aid  of 
the  clumsy  implements  which  had  originally  been  invented 
for  the  purpose.  -  “  Carding  is  the  process  to  which  the 
cotton  is  subjected  after  it  has  been  opened  and  cleaned, 
in  order  that  the  fibres  of  the  wool  may  be  disentangled, 
straightened,  and  laid  parallel  with  each  other,  so  as  to  ad¬ 
mit  of  being  spun.  This  was  formerly  effected  by  instru¬ 
ments  called  hand-cards,  which  were  brushes  made  of  short 
pieces  of  wire  instead  of  bristles,  the  wires  being  stuck  into 
a  sheet  of  leather  at  a  certain  angle,  and  the  leather  fast¬ 
ened  on  a  flat  piece  of  wood  about  twelve  inches  long  and 
five  wide,  with  a  handle.  The  cotton  being  spread  upon  one 
of  the  cards,  it  was  repeatedly  combed  with  another  till  all 
the  fibres  were  laid  straight,  when  it  was  stripped  off  the 
card  in  a  fleecy  roll  ready  for  the  rover.  In  4  roving  ’  the 
spinner  took  the  short  fleecy  rolls  in  which  the  cotton  was 
stripped  off  the  hand-cards,  applied  them  successively  to  the 
spindle,  and  while  with  one  hand  she  turned  the  wheel  and 
thus  made  the  spindle  revolve,  with  the  other  she  drew  out 
the  cardings,  which,  receiving  a  slight  twist  from  the  spin¬ 
dle,  were  made  into  thick  threads  called  rovings,  and  wound 
upon  the  spindle  so  as  to  form  cops.”  In  spinning,  “the 
roving  was  spun  into  yarn;  the  operation  was  similar,  but 


38 


ECONOMIC  HISTORY. 


the  thread  was  drawn  out  much  finer  and  received  much 
more  twist.  It  will  be  seen  that  this  instrument  only  ad¬ 
mitted  of  one  thread  being  spun  at  a  time  by  one  pair  of 
hands,  and  the  slowness  of  the  operation  and  consequent 
expensiveness  of  the  yarn  formed  a  great  obstacle  to  the 
establishment  of  a  new  manufacture.” 

The  trade  was  in  this  humble  and  primitive  state  when  a 
series  of  extraordinary  and  unparalleled  inventions  revolu¬ 
tionized  the  conditions  on  which  cotton  had  been  hitherto 
prepared.  A  little  more  than  a  century  ago  John  Har¬ 
greaves,  a  poor  weaver  in  the  neighborhood  of  Blackburn, 
was  returning  home  from  a  long  walk  in  which  he  had  been 
purchasing  a  further  supply  of  yarn  for  his  loom.  As  he 
entered  his  cottage,  his  wife  Jenny  accidentally  upset  the 
spindle  which  she  was  using.  Hargreaves  noticed  that  the 
spindles,  which  were  now  thrown  into  an  upright  position, 
continued  to  revolve,  and  that  the  thread  was  still  spinning 
in  his  wife’s  hand.  The  idea  immediately  occurred  to  him 
that  it  would  be  possible  to  connect  a  considerable  number 
of  upright  spindles  with  one  wheel,  and  thus  multiply  the 
productive  power  of  each  spinster.  “  He  contrived  a  frame, 
in  one  part  of  which  he  placed  eight  rovings  in  a  row,  and 
in  another  part  a  row  of  eight  spindles.  The  rovings,  when 
extended  to  the  spindles  passed  between  two  horizontal  bars 
of  wood,  forming  a  clasp  which  opened  and  shut  somewhat 
like  a  parallel  ruler.  When  pressed  together  this  clasp  held 
the  threads  fast;  a  certain  portion  of  roving  being  extended 
from  the  spindles  to  the  wooden  clasp,  the  clasp  was  closed, 
and  was  then  drawn  along  the  horizontal  frame  to  a  consid¬ 
erable  distance  from  the  spindles,  by  which  the  threads  were 
lengthened  out  and  reduced  to  the  proper  tenuity ;  this  was  ' 
done  with  the  spinner’s  left  hand,  and  his  right  hand  at  the 
same  time  turned  a  wheel  which  caused  the  spindles  to  re¬ 
volve  rapidly,  and  thus  the  roving  was  spun  into  yarn.  By 
returning  the  clasp  to  its  first  situation  and  letting  down  a 
piercer  wire,  the  yarn  was  wound  upon  the  spindle.  ” 

Hargreaves  succeeded  in  keeping  his  admirable  invention 
secret  for  a  time ;  but  the  powers  of  his  machine  soon  be- 


THE  GREAT  INVENTIONS. 


39 


came  known.  His  ignorant  neighbors  hastily  concluded 
that  a  machine  which  enabled  one  spinster  to  do  the  work 
of  eight  would  throw  multitudes  of  persons  out  of  employ¬ 
ment.  A  mob  broke  into  his  house  and  destroyed  his  ma¬ 
chine.  Hargreaves  himself  had  to  retire  to  Nottingham, 
where,  with  the  friendly  assistance  of  another  person,  he  was 
able  to  take  out  a  patent  for  the  spinning-jenny,  as  the 
machine,  in  compliment  to  his  industrious  wife,  was  called. 

The  invention  of  the  spinning-jenny  gave  a  new  impulse  to 
the  cotton  manufacture.  But  the  invention  of  the  spinning- 
jenny,  if  it  had  been  accompanied  by  no  other  improvements, 
would  not  have  allowed  any  purely  cotton  goods  to  be  manu¬ 
factured  in  England.  The  yarn  spun  by  the  jenny,  like  that 
which  had  previously  been  spun  by. hand,  was  neither  fine 
enough  nor  hard  enough  to  be  employed  as  warp,  and  linen 
or  woollen  threads  had  consequently  to  be  used  for  this  pur¬ 
pose.  In  the  very  year,  however,  in  which  Hargreaves 
moved  from  Blackburn  to  Nottingham,  Richard  Arkwright 
took  out  a  patent  for  his  still  more  celebrated  machine.  It 
is  alleged  that  John  Wyatt,  of  Birmingham,  thirty  years 
before  the  date  of  Arkwright’s  patent,  had  elaborated  a 
machine  for  spinning  by  rollers.  But  in  a  work  of  this 
description  it  is  impossible  to  analyze  the  conflicting  claims 
of  rival  inventors  to  the  credit  of  discovering  particu¬ 
lar  machinery;  and  the  historian  can  do  no  more  than 
record  the  struggles  of  those  whose  names  are  associated 
with  the  improvements  which  he  is  noticing.  Richard 
Arkwright,  like  John  Hargreaves,  had  a  humble  origin. 
Hargreaves  began  life  as  a  poor  weaver;  Arkwright,  as  a 
barber’s  assistant.  Hargreaves  had  a  fitting  partner  in  his 
industrious  wife  Jenny.  Mrs.  Arkwright  is  said  to  have 
destroyed  the  models  which  her  husband  had  made.  But 
Arkwright  was  not  deterred  from  his  pursuit  by  the  poverty 
of  his  circumstances  or  the  conduct  of  his  wife.  “  After 
many  years’  intense  and  painful  application,”  he  invented 
his  memorable  machine  for  spinning  by  rollers;  and  laid  the 
foundations  of  the  gigantic  industry  which  has  done  more 
than  any  other  trade  to  concentrate  in  this  country  the  wealth 


40 


ECONOMIC  HISTORY. 


of  the  world.  The  principle  of  Arkwright’s  great  invention 
is  very  simple.  He  passed  the  thread  over  two  pairs  of  rol¬ 
lers,  one  of  which  was  made  to  revolve  much  more  rapidly 
than  the  other.  The  thread,  after  passing  over  the  pair 
revolving  slowly,  was  drawn  into  the  requisite  tenuity  by  the 
rollers  revolving  at  a  higher  rapidity.  By  this  simple  but 
memorable  invention  Arkwright  succeeded  in  producing 
thread  capable  of  employment  as  warp.  From  the  circum¬ 
stance  that  the  mill  at  which  his  machinery  was  first  erected 
was  driven  by  water  power,  the  machine  received  the  some¬ 
what  inappropriate  name  of  the  water-frame;  the  thread 
spun  by  it  was  usually  called  the  water-twist. 

The  invention  of  the  fly-shuttle  by  John  Kay  had  enabled 
the  weavers  to  consume  more  cotton  than  the  spinsters  had 
been  able  to  provide ;  the  invention  of  the  spinning-jenny 
and  the  water-frame  would  have  been  useless  if  the  old  sys¬ 
tem  of  hand-carding  had  not  been  superseded  by  a  more 
efficient  and  more  rapid  process.  Just  as  Arkwright  applied 
rotatory  motion  to  spinning,  so  Lewis  Paul  introduced 
revolving  cylinders  for  carding  cotton.  Paul’s  machine 
consisted  of  “a  horizontal  cylinder,  covered  in  its  whole 
circumference  with  parallel  rows  of  cards  with  intervening 
spaces,  and  turned  by  a  handle.  Under  the  cylinder  was  a 
concave  frame,  lined  internally  with  cards  exactly  fitting 
the  lower  half  of  the  cylinder,  so  that  when  the  handle  was 
turned,  the  cards  of  the  cylinder  and  of  the  concave  frame 
worked  against  each  other  and  carded  the  wool.”  “The 
cardings  were  of  course  only  of  the  length  of  the  cylinder, 
but  an  ingenious  apparatus  was  attached  for  making  them 
into  a  perpetual  carding.  Each  length  was  placed  on  a  flat 
broad  ribbon  which  was  extended  between  two  short  cylin¬ 
ders  and  which  wound  upon  one  cylinder  as  it  unwound  from 
the  other.  ” 1 

This  extraordinary  series  of  inventions  placed  an  almost 
unlimited  supply  of  yarn  at  the  disposal  of  the  weaver.  But 
the  machinery  which  had  thus  been  introduced  was  still 

1  Baines’  “History  of  the  Cotton  Manufacture,”  p.  173,  from  which  work 
the  preceding  quotations  are  also  taken. 


THE  GREAT  INVENTIONS . 


41 


incapable  of  providing  yarn  fit  for  the  finer  qualities  of  cot¬ 
ton  cloth.  “The  water-frame  spun  twist  for  warps,  but  it 
could  not  be  advantageously  used  for  the  finer  qualities,  as 
thread  of  great  tenuity  has  not  strength  to  bear  the  pull  of 
the  rollers  when  winding  itself  on  the  bobbin.  ”  This  defect, 
however,  was  removed  by  the  ingenuity  of  Samuel  Crompton,  a 
young  weaver  residing  near  Bolton.  Crompton  succeeded  in 
combining  in  one  machine  the  various  excellences  of  “Ark¬ 
wright’s  water-frame  and  Hargreaves’  jenny.”  Like  the  for¬ 
mer,  his  machine,  which  from  its  nature  is  happily  called  the 
mule,  “  has  a  system  of  rollers  to  reduce  the  roving ;  and,  like 
the  latter,  it  has  spindles  without  bobbins  to  give  the  twist, 
and  the  thread  is  stretched  and  spun  at  the  same  time  by  the 
spindles  after  the  rollers  have  ceased  to  give  out  the  rove. 
The  distinguishing  feature  of  the  mule  is  that  the  spindles, 
instead  of  being  stationary,  as  in  both  the  other  machines, 
are  placed  on  a  movable  carriage,  which  is  wheeled  out  to 
the  distance  of  fifty-four  or  fifty-six  inches  from  the  roller 
beam,  in  order  to  stretch  and  twist  the  thread,  and  wheeled 
in  again  to  wind  it  on  the  spindles.  In  the  jenny,  the  clasp 
which  held  the  rovings  was  drawn  back  by  the  hand  from  the 
spindles;  in  the  mule,  on  the  contrary,  the  spindles  recede 
from  the  clasp,  or  from  the  roller  beam,  which  acts  as  a 
clasp.  The  rollers  of  the  mule  draw  out  the  roving  much 
less  than  those  of  the  water-frame,  and  they  act  like  the 
clasp  of  the  jenny  by  stopping  and  holding  fast  the  rove, 
after  a  certain  quantity  has  been  given  out,  while  the  spin¬ 
dles  continue  to  recede  for  a  short  distance  farther,  so  that 
the  draught  of  the  thread  is  in  part  made  by  the  receding  of 
the  spindles.  By  this  arrangement,  comprising  the  advan¬ 
tages  both  of  the  roller  and  the  spindles,  the  thread  is 
stretched  more  gently  and  equably,  and  a  much  finer  quality 
of  yarn  can  therefore  be  produced.  ”  1 

The  effects  of  Crompton’s  great  invention  may  be  stated 
epigrammatically.  Before  Crompton’s  time  it  was  thought 
impossible  to  spin  eighty  hanks  to  the  pound.  The  mule 


1  Baines’s  “History  of  the  Cotton  Manufacture,”  pp.  107,  198. 


42 


ECONOMIC  HISTORY. 


has  spun  three  hundred  and  fifty  hanks  to  the  pound !  The 
natives  of  India  could  spin  a  pound  of  cotton  into  a  thread 
one  hundred  and  nineteen  miles  long.  The  English  suc¬ 
ceeded  in  spinning  the  same  thread  to  a  length  of  one  hun¬ 
dred  and  sixty  miles.1  Yarn  of  the  finest  quality  was  at 
once  at  the  disposal  of  the  weaver,  and  an  opportunity  was 
afforded  for  the  production  of  an  indefinite  quantity  of  cotton 
yarn.  But  the  great  inventions  which  have  been  thus  enu¬ 
merated  would  not  of  themselves  have  been  sufficient  to 
establish  the  cotton  manufacture  on  its  present  basis.  The 
ingenuity  of  Hargreaves,  Arkwright,  and  Crompton  had 
been  exercised  to  provide  the  weaver  with  yarn.  Their  in¬ 
ventions  had  provided  him  with  more  yarn  than  he  could  by 
any  possibility  use.  The  spinster  had  beaten  the  weaver, 
just  as  the  weaver  had  previously  beaten  the  spinster,  and 
the  manufacture  of  cotton  seemed  likely  to  stand  still  be¬ 
cause  the  yarn  could  not  be  woven  more  rapidly  than  an 
expert  workman  with  Kay’s  improved  fly-shuttle  could 
weave  it. 

Such  a  result  was  actually  contemplated  by  some  of  the 
leading  manufacturers,  and  such  a  result  might  possibly  have 
temporarily  occurred  if  it  had  not  been  averted  by  the  inge¬ 
nuity  of  a  Kentish  clergyman.  Edmund  Cartwright,  a  clergy¬ 
man  residing  in  Kent,  happened  to  be  staying  at  Matlock  in 
the  summer  of  1784,  and  to  be  thrown  into  the  company  of 
some  Manchester  gentlemen.  The  conversation  turned  on 
Arkwright’s  machinery,  and  “  one  of  the  company  observed 
that  as  soon  as  Arkwright’s  patent  expired  so  many  mills 
would  be  erected  and  so  much  cotton  spun  that  hands  would 
never  be  found  to  weave  it.”  Cartwright  replied  that  “Ark¬ 
wright  must  then  set  his  wits  to  work  to  invent  a  weaving 
mill.”  The  Manchester  gentlemen,  however,  unanimously 
agreed  that  the  thing  was  impracticable.  Cartwright  “con¬ 
troverted  the  impracticability  by  remarking  that  there  had 
been  exhibited  an  automaton  figure  which  played  at  chess ;  ” 
it  could  not  be  “  more  difficult  to  construct  a  machine  that 

1  Baines’s  “History  of  the  Cotton  Manufacture,  p.  200,  and  “Colchester,” 
vol.  ii.  p.  75. 


THE  GREAT  INVENTIONS . 


43 


shall  weave  than  one  which  shall  make  all  the  variety  of 
moves  which  are  required  in  that  complicated  game.” 
Within  three  years  he  had  himself  proved  that  the  invention 
w^as  practicable  by  producing  the  power-loom.  Subsequent 
inventors  improved  the  idea  which  Cartwright  had  origi¬ 
nated,  and  within  fifty  years  from  the  date  of  his  memorable 
visit  to  Matlock  there  were  not  less  than  100,000  power- 
looms  at  work  in  Great  Britain  alone.1 

The  inventions  which  have  been  thus  enumerated  are  the 
most  remarkable  of  the  improvements  which  stimulated  the 
development  of  the  cotton  industry.  But  other  inventions, 
less  generally -remembered,  were  hardly  less  wonderful  or 
less  beneficial  than  these.  Up  to  the  middle  of  last  century 
cotton  could  only  be  bleached  by  the  cloth  being  steeped  in 
alkaline  lyes  for  several  days,  washed  clean,  and  spread  on 
the  grass  for  some  weeks  to  dry.  The  process  had  to  be  re¬ 
peated  several  times,  and  many  months  were  consumed  before 
the  tedious  operation  was  concluded.  Scheele,  the  Swedish 
philosopher,  discovered  in  1774  the  bleaching  properties  of 
chlorine,  or  oxymuriatic  acid.  Berthollet,  the  French 
chemist,  conceived  in  1785  the  idea  of  applying  the  acid  to 
bleaching  cloth.  Watt,  the  inventor  of  the  steam-engine, 
and  Henry  of  Manchester,  respectively  introduced  the  new 
acid  into  the  bleach-fields  of  Macgregor  of  Glasgow  and 
Ridgway  of  Bolton.  The  process  of  bleaching  was  at  once 
reduced  from  months  to  days,  or  even  hours.2 

In  the  same  year  in  which  Watt  and  Henry  were  introdu¬ 
cing  the  new  acid  to  the  bleacher,  Bell,  a  Scotchman,  was 
laying  the  foundations  of  a  trade  in  printed  calicoes.  “  The 
old  method  of  printing  was  by  blocks  of  sycamore,  about  ten 
inches  long  by  five  broad,  on  the  surface  of  which  the  pat¬ 
tern  was  cut  in  relief  in  the  common  method  of  wood  en¬ 
graving.  ”  As  the  block  had  to  be  applied  to  the  cloth  by 
hand,  a  no  more  of  it  could  be  printed  at  once  than  the  block 
could  cover,  and  a  single  piece  of  calico,  twenty-eight  yards 
in  length,  required  the  application  of  the  block  four  hundred 

1  Baines’s  “Cotton,”  pp.  229,  235. 

2  Ibid.,  pp.  247-249. 


44 


ECONOMIC  HISTORY. 


and  forty-eight  times.  ”  1  This  clumsy  process  was  superseded 
by  cylinder  printing.  “A  polished  copper  cylinder,  several 
feet  in  length  and  three  or  four  inches  in  diameter,  is  en¬ 
graved  with  a  pattern  round  its  whole  circumference  and  from 
end  to  end.  It  is  then  placed  horizontally  in  a  press,  and,  as  it 
revolves,  the  lower  part  of  the  circumference  passes  through 
the  coloring  matter,  which  is  again  removed  from  the  whole 
surface  of  the  cylinder,  except  the  engraved  pattern,  by  an 
elastic  steel  blade  placed  in  contact  with  the  cylinder,  and 
reduced  to  so -fine  and  straight  an  edge  as  to  take  off  the- 
color  without  scratching  the  copper.  The  color  being  thus 
left  only  in  the  engraved  pattern,  the  piece  of  calico  or 
muslin  is  drawn  tightly  over  the  cylinder,  which  revolves 
in  the  same  direction,  and  prints  the  cloth.”  The  sav¬ 
ing  of  labor  “  effected  by  the  machine”  is  “  immense ;  one 
of  the  cylinder  machines,  attended  by  a  man  and  a  boy, 
is  actually  capable  of  producing  as  much  work  as  could 
be  turned  out  by  one  hundred  block  printers,  and  as  many 
tear  boys.  ” 2 

Such  are  the  leading  inventions  which  made  Great  Britain 
in  less  than  a  century  the  wealthiest  country  in  the  world. 
“When  we  undertook  the  cotton  manufacture  we  had  com¬ 
paratively  few  facilities  for  its  prosecution,  and  had  to 
struggle  with  the  greatest  difficulties.  The  raw  material 
was  produced  at  an  immense  distance  from  our  shores,  and 
in  Hindustan  and  in  China  the  inhabitants  had  arrived  at 
such  perfection  in  the  arts  of  spinning  and  weaving  that  the 
lightness  and  delicacy  of  their  finest  cloths  emulated  the 
web  of  the  gossamer,  and  seemed  to  set  competition  at  defi¬ 
ance.  Such,  however,  has  been  the  influence  of  the  stupen¬ 
dous  discoveries  and  inventions  of  Hargreaves,  Arkwright, 
Crompton,  Cartwright,  and  others,  that  we  have  overcome 
all  these  difficulties,  —  that  neither  the  extreme  cheapness  of 
labor  in  Hindustan,  nor  the  excellence  to  which  the  natives 
had  attained,  has  enabled  them  to  withstand  the  competition 
of  those  who  buy  their  cotton,  and  who,  after  carrying  it 

1  Baines’s  “  Cotton,”  pp.  264,  265. 

2  Ibid.,  pp.  265,  266. 


THE  GREAT  INVENTIONS. 


45 


five  thousand  miles  to  be  manufactured,  carry  back  the  goods 
to  them.  ” 1 

If  Great  Britain  entirely  monopolized  the  woollen  and  the 
cotton  trades,  she  had  done  her  best,  in  her  own  way,  to 
promote  the  manufacture  of  linen  in  Ireland.  In  1698  Par¬ 
liament,  while  rigorously  prohibiting  the  exportation  of 
Irish  woollen  goods,  sedulously  attempted  to  encourage  the 
linen  manufacture  in  Ireland.  Bounties  were  paid  on  all 
linen  goods  imported  into  this  country  from  the  sister 
island;  and  the  great  linen  trade  acquired,  especially  in 
Ulster,  the  importance  which  it  still  retains.  In  1800 
81,978,039  yards  of  linen  were  exported  from  Ireland  to 
Great  Britain,  and  2,585,829  yards  to  other  countries.  In 
1815  the  export  trade  had  risen  to  37,986,359  and  5,496,206 
yards  respectively.  A  formidable  rival  to  Ulster  was,  how¬ 
ever,  slowly  rising  in  another  part  of  the  kingdom.  At  the 
close  of  the  great  French  war  Dundee  was  still  an  insignifi¬ 
cant  manufacturing  town,  but  the  foundations  were  already 
laid  of  the  surprising  supremacy  which  she  has  since  ac¬ 
quired  in  the  linen  trade.  Some  three  thousand  tons  of  flax 
were  imported  into  the  Scotch  port  in  1814.  But  the  time 
was  rapidly  coming  when  the  shipments  of  linen  from  this 
single  place  were  to  exceed  those  from  all  Ireland,  and  Dun¬ 
dee  was  to  be  spoken  of  by  professed  economists  as  the  Man¬ 
chester  of  the  linen  trade.2 

The  silk  manufacturers  of  Britain  have  never  yet  succeeded 
in  acquiring  the  predominance  which  the  woollen,  cotton, 
and  linen  factors  have  virtually  obtained.  The  worm  by 
which  the  raw  material  is  produced  has  never  been  accli¬ 
matized  on  a  large  scale  in  England ;  and  the  trade  has  natu¬ 
rally  flourished  chiefly  in  those  countries  where  the  worm 
could  live  and  spin,  or  where  the  raw  material  could  be  the 
most  easily  procured.  Insular  prejudice,  moreover,  should 
not  induce  the  historian  to  forget  another  reason  which  has 
materially  interfered  with  the  development  of  this  particular 
trade.  The  ingenuity  of  the  British  was  superior  to  that  of 

1  McCulloch’s  “  Commercial  Diet.,”  ad  verb.  Cotton. 

2  McCulloch,  ad  verb.  Linen ;  Porter’s  “  Progress  of  the  Nation,”  p.  230. 


46 


ECONOMIC  HISTORY. 


every  other  nation;  but  the  taste  of  the  British  was  inferior 
to  that  of  most  people.  An  article  which  was  only  worn  by 
the  rich,  and  which  was  only  used  for  its  beauty  and  deli¬ 
cacy,  was  naturally  produced  most  successfully  by  the  most 
artistic  people.  English  woollen  goods  found  their  way  to 
every  continental  jiation ;  but  the  wealthy  English  imported 
their  finest  lustrings  and  a  les  modes  from  Italy  and  France. 
The  silk  trade  would,  in  fact,  have  hardly  found  a  home  in 
England  at  all  had  it  not  been  for  the  folly  of  a  neighboring 
potentate.  Louis  XIV.,  in  a  disastrous  hour  for  France, 
revoked  the  Edict  of  Nantes;  and  the  French  Huguenots,  to 
their  eternal  honor,  preferring  their  consciences  to  their 
country,  sought  a  home  among  a  more  liberal  people.  The 
silk  weavers  of  France  settled  in  Spitalfields,  and  the  British 
silk  trade  gained  rapidly  on  its  foreign  rivals.  Parliament 
adopted  the  usual  clumsy  contrivances  to  promote  an  indus¬ 
try  whose  importance  it  was  no  longer  possible  to  ignore. 
Prohibitory  duties,  designed  to  discourage  the  importation 
of  foreign  silk,  were  imposed  by  the  legislature;  monopolies 
were  granted  to  successful  throwsters,  and  every  precaution 
was  taken  which  the  follies  of  protection  could  suggest,  to 
perpetuate  the  supremacy  which  Great  Britain  was  gradually 
acquiring  in  the  silk  trade.  The  usual  results  followed  this 
short-sighted  policy.  Prohibitory  duties  encouraged  smug¬ 
gling.  Foreign  silk  found  its  way  into  England,  and  the 
revenue  was  defrauded  accordingly.  The  English  trade 
began  to  decline,  and  Parliament  again  interfered  to  pro¬ 
mote  its  prosperity.  In  that  unhappy  period  of  English 
history  which  succeeds  the  fall  of  Chatham  and  the  rise  of 
Pitt,  Parliament  adopted  fresh  expedients  to  promote  the 
prosperity  of  the  silk  trade.  Prohibitory  duties  were  re¬ 
placed  with  actual  prohibition,  and  elaborate  attempts  were 
made  to  regulate  the  wages  of  the  Spitalfields  weavers.  The 
natural  consequences  ensued.  Smuggling,  which  had  been 
created  by  prohibitive  duties,  flourished  with  fresh  vitality 
under  the  influence  of  actual  prohibition.  The  capitalists 
transferred  their  mills  from  Spitalfields,  where  the  labors 
of  their  workmen  were  fixed  by  law,  to  Macclesfield  and 


THE  GREAT  INVENTIONS. 


47 


other  places,  where  master  and  workmen  were  free  to  make 
their  own  terms. 

The  silk  trade  was  hardly  being  developed  with  the  same 
rapidity  as  the  three  other  textile  industries.  But  silk, 
like  wool,  cotton,  and  linen,  was  affording  a  considerable 
amount  of  employment  to  a  constantly  growing  population. 
The  textile  industries  of  this  country  could  not  indeed  have 
acquired  the  importance  which  they  have  since  obtained,  if 
the  inventions  of  Hargreaves,  Arkwright,  Crompton,  and 
Cartwrigfit  had  not  been  supplemented  by  the  labors  of  ex¬ 
plorers  in  another  field.  Machinery  makes  possible  what 
man  by  manual  labor  alone  would  find  it  impossible  to  per¬ 
form.  But  machinery  would  be  a  useless  incumbrance  were 
it  not  for  the  presence  of  some  motive  power.  From  the 
earliest  ages  men  have  endeavored  to  supplement  the  brute 
force  of  animals  with  the  more  powerful  forces  which  nature 
has  placed  at  their  disposal.  The  ox  was  not  to  be  perpetu¬ 
ally  used  to  tread  out  the  corn ;  women  were  not  always  to 
pass  their  days  laboriously  grinding  at  a  mill.  The  move¬ 
ment  of  the  atmosphere,  the  flow  of  running  water,  were  to 
be  taken  into  alliance  with  man ;  and  the  invention  of  wind¬ 
mills  and  water-mills  was  to  mark  an  advance  in  the  onward 
march  of  civilization.  But  air  and  water,  mighty  forces  as 
they  are,  proved  but  fickle  and  uncertain  auxiliaries.  When 
the  wind  was  too  low  its  strength  was  insufficient  to  turn  the 
cumbrous  sails  of  the  mill ;  when  it  was  too  high  it  deranged 
the  complicated  machinery  of  the  miller.  The  miller  who 
trusted  to  water  was  hardly  more  fortunate  than  the  man 
who  relied  upon  air.  A  summer  drought  reduced  the  power 
of  his  wheel  at  the  very  time  when  long  days  and  fine 
weather  made  him  anxious  to  accomplish  the  utmost  possi¬ 
ble  amount  of  work.  A  flood  swept  away  the  dam  on  which 
his  mill  depended  for  its  supply  of  water.  An  admirable 
auxiliary  during  certain  portions  of  each  year,  water  was 
occasionally  too  strong,  occasionally  too  weak,  for  the  pur¬ 
poses  of  the  miller. 

The  manufacturing  industry  of  the  country  stood,  there¬ 
fore,  in  need  of  a  new  motive  power;  and  invention,  which 


48 


ECONOMIC  HISTORY. 


is  supposed  by  some  thinkers  to  depend  like  other  commod¬ 
ities  on  the  laws  of  demand  and  supply,  was  busily  elaborat¬ 
ing  a  new  problem,  —  the  use  of  a  novel  power,  which  was  to 
revolutionize  the  world.  The  elasticity  of  hot  water  had 
long  been  noticed,  and  for  a  century  and  a  half  before  the 
period  of  this  history  a  few  advanced  thinkers  had  been 
speculating  on  the  possibility  of  utilizing  the  expansive 
powers  of  steam.  The  Marquis  of  Worcester  had  described, 
in  his  “Century  of  Inventions,”  “an  admirable  and  most 
forcible  way  to  drive  up  water  by  means  of  fire.”  Steam 
was  actually  used  early  in  the  eighteenth  century  as  a  mo¬ 
tive  power  for  pumping  water  from  mines ;  and  Newcomen, 
a  blacksmith  in  Dartmouth,  invented  a  tolerably  efficient 
steam-engine.  It  was  not,  however,  till  1769  that  James 
Watt,  a  native  of  Greenock,  and  a  mathematical  instrument- 
maker  in  Glasgow,  obtained  his  first  patent  for  “  methods  of 
lessening  the  consumption  of  steam,  and  consequently  of 
fuel,  in  fire-engines.”  James  Watt  was  born  in  1736.  His 
father  was  a  magistrate,  and  had  the  good  sense  to  encour¬ 
age  the  good  turn  for  mechanics  which  his  son  displayed  at 
a  very  early  age.  At  the  age  of  nineteen  Watt  was  placed 
with  a  mathematical  instrument-maker  in  London.  But 
feeble  health,  which  had  interfered  with  his  studies  as  a 
boy,  prevented  him  from  pursuing  his  avocations  in  England. 
Watt  returned  to  his  native  country.  The  Glasgow  body  of 
Arts  and  Trades,  however,  refused  to  allow  him  to  exercise 
his  calling  within  the  limits  of  their  jurisdiction;  and  had  it 
not  been  for  the  University  of  Glasgow,  which  befriended 
him  in  his  difficulty,  and  appointed  him  their  mathematical 
instrument-maker,  the  career  of  one  of  the  greatest  geniuses 
whom  Great  Britain  has  produced  would  have  been  stinted 
at  its  outset. 

There  happened  to  be  in  the  University  a  model  of  New¬ 
comen’s  engine.  It  happened,  too,  that  the  model  was 
defectively  constructed.  Watt,  in  the  ordinary  course  of 
his  business,  was  asked  to  remedy  its  defects,  and  he  soon 
succeeded  in  doing  so.  But  his  examination  of  the  model 
convinced  him  of  serious  faults  in  the  original.  Newcomen 


THE  GREAT  INVENTIONS . 


49 


had  injected  cold  water  into  the  cylinder  in  order  to  con¬ 
dense  the  steam  and  thus  obtain  a  necessary  vacuum  for  the 
piston  to  work  in.  Watt  discovered  that  three  fourths  of 
the  fuel  which  the  engine  consumed  was  required  to  reheat 
the  cylinder.  “  It  occurred  to  him  that  if  the  condensation 
could  be  performed  in  a  separate  vessel,  communicating  with 
the  cylinder,  the  latter  could  be  kept  hot  while  the  former 
was  cooled,  and  the  vapor  arising  from  the  injected  water 
could  also  be  prevented  from  impairing  the  vacuum.  The 
communication  could  easily  be  effected  by  a  tube,  and  the 
water  could  be  pumped  out.  This  is  the  first  and  the  grand 
invention  by  which  he  at  once  saved  three  fourths  of  the  fuel, 
and  increased  the  power  one  fourth,  thus  making  every  pound 
of  coal  produce  five  times  the  force  formerly  obtained  from 
it.”1  But  Watt  was  not  satisfied  with  this  single  improve¬ 
ment.  He  introduced  steam  above  as  well  as  below  the 
piston,  and  thus  again  increased  the  power  of  the  machine. 
He  discovered  the  principle  of  parallel  motion,  and  thus 
made  the  piston  move  in  a  true  straight  line.  He  regulated 
the  supply  of  water  to  the  boiler  by  the  means  of  “floats,” 
the  supply  of  steam  to  the  cylinder  by  the  application 
of  “the  governor,”  and,  by  the  addition  of  all  these  discov¬ 
eries,  “satisfied  himself  that  he  had  almost  created  anew 
engine,  of  incalculable  power,  universal  application,  and  in¬ 
estimable  value.”2  It  is  unnecessary  to  relate  in  these 
pages  the  gradual  introduction  of  the  new  machine  to  the 
manufacturing  public.  Watt  was  first  connected  with  Dr. 
Roebuck,  an  iron-master  of  Glasgow.  But  his  name  is  per¬ 
manently  associated  with  that  of  Mr.  Boulton,  the  proprietor 
of  the  Soho  Works  near  Birmingham,  whose  partner  he  be¬ 
came  in  1774.  Watt  and  Boulton  rapidly  supplemented  the 
original  invention  with  further  improvements.  Other  in¬ 
ventors  succeeded  in  the  same  field,  and  by  the  beginning  of 
the  present  century  steam  was  established  as  a.  new  force; 
advanced  thinkers  were  considering  the  possibility  of  apply¬ 
ing  it  to  purposes  of  locomotion. 

1  Lord  Brougham’s  “  Men  of  Letters  and  Science,”  p.  367. 

,  2  Ibid.,  p.  371. 


4 


50 


ECONOMIC  HISTORY. 


The  steam-engine  indeed  would  not  have  been  invented  in 
the  eighteenth  century,  or  would  not  at  any  rate  have  been 
discovered  in  this  country,  if  it  had  not  been  for  the  vast 
mineral  wealth  with  which  Great  Britain  lias  fortunately 
been  provided.  Iron,  the  most  useful  of  all  metals,  presents 
greater  difficulties  than  any  other  of  them  to  the  manufac¬ 
turer,  and  iron  was  probably  one  of  the  very  last  minerals 
which  was  applied  to  the  service  of  man.  Centuries  elapsed 
before  the  rich  mines  of  our  own  country  were  even  slightly 
worked.  The  Homans  indeed  established  iron  works  in 
Gloucestershire,  just  as  they  obtained  tin  from  Cornwall  or 
lead  from  Wales.  But  the  British  did  not  imitate  the  ex. 
ample  of  their  earliest  conquerors,  and  the  little  iron  which 
was  used  in  this  country  was  imported  from  abroad.  Some 
progress  was,  no  doubt,  made  in  the  southern  counties,  —  the 
smelters  naturally  seeking  their  ores  in  those  places  where 
wood,  then  the  only  available  fuel,  was  to  be  found  in  abun¬ 
dance.  The  railings  which  but  latelv  encircled  our  metro- 
politan  cathedral  were  cast  in  Sussex.  But  the  prosperity 
of  the  trade  involved  its  own  ruin.  Iron  could  not  be  made 
without  large  quantities  of  fuel.  The  wood  gradually  dis¬ 
appeared  before  the  operations  of  the  smelter,  and  the  coun¬ 
try  gentlemen  hesitated  to  sell  their  trees  for  fuel  when  the 
increase  of  shipping  was  creating  a  .  growing  demand  for 
timber.  Nor  were  the  country  gentlemen  animated  in  this 
respect  by  purely  selfish  motives.  Parliament  itself  shared 
their  apprehensions  and  endorsed  their  views.  It  regarded 
the  constant  destruction  of  timber  with  such  disfavor  that  it 
seriously  contemplated  the  suppression  of  the  iron  trade  as 
the  only  practical  remedy.  “Many  think,”  said  a  contem¬ 
porary  writer,  “that  there  should  be  no  works  anywhere, 
they  so  devour  the  woods.  ”  1  Fortunately,  so  crucial  a  rem¬ 
edy  was  not  necessary.  At  the  commencement  of  the  seven¬ 
teenth  century,  Dud  Dudley,  a  natural  son  of  Lord  Dudley, 
had.  proved  the  feasibility  of  smelting  iron  with  coal;  but 
the  prejudice  and  ignorance  of  the  work-people  had  pre¬ 
vented  the  adoption  of  his  invention.  In  the  middle  of  the 

1  Srailes’s  “  Industrial  Biography,”  p.  43. 


BUSI 


THE  GREAT  INVENTIONS. 


51 


eighteenth  century  attention  was  again  drawn  to  his  pro¬ 
cess,  and  the  possibility  of  substituting  coal  for  wood  was 
conclusively  established  at  the  Darby’s  works  at  Coalbrook 
Dale.  The  impetus  which  was  thus  given  to  the  iron  trade 
was  extraordinary.  The  total  produce  of  the  country 
amounted  at  the  time  to  only  eighteen  thousand  tons  of  iron 
a  year,  four  fifths  of  the  iron  used  being  imported  from 
Sweden.  In  1802  Great  Britain  possessed  one  hundred  and 
sixty-eight  blast-furnaces,  and  produced  170,000  tons  of 
iron  annually.  In  1806  the  produce  had  risen  to  250,000 
tons;  it  had  increased  in  1820  to  400,000  tons.  Fifty  years 
afterwards,  or  in  1870,  6,000,000  tons  of  iron  were  produced 
from  British  ores.1 

The  progress  of  the  iron  trade  indicated,  of  course,  a  cor¬ 
responding  development  of  the  supply  of  coal.  Coal  had 
been  used  in  England  for  domestic  purposes  from  very  early 
periods.  Sea  coal  had  been  brought  to  London;  but  the 
citizens  had  complained  that  the  smoke  was  injurious  to 
their  health,  and  had  persuaded  the  legislature  to  forbid  the 
use  of  coal  on  sanitary  grounds.  The  convenience  of  the 
new  fuel  triumphed,  however,  over  the  arguments  of  the  sani¬ 
tarians  and  the  prohibitions  of  the  legislature,  and  coal 
continued  to  be  brought  in  constantly  though  slowly  increas- 
-  ing  quantities  to  London.  Its  use  for  smelting  iron  led  to 
new  contrivances  for  ensuring  its  economical  production. 
Before  the  commencement  of  the  present  century  there  were 
two  great  difficulties  which  interfered  with  the  operations  of 
the  miner.  The  roof  of  the  mine  had  necessarily  to  be 
propped,  and,  as  no  one  had  thought  of  using  wood,  and  coal 
itself  was  employed  for  the  purpose,  only  sixty  per  cent  of 
the  produce  of  each  mine  was  raised  above  ground.  About 
the  beginning  of  the  nineteenth  century  timber  struts  were 
gradually  substituted  for  the  pillars  of  coal,  and  it  became 
consequently  possible  to  raise  from  the  mine  all  the  coal 

won  by  the  miner.  A  still  more  important  discovery  was 

* 

1  “Diet.  Hist.”  vol.  iv.  p.  680;  McCulloch,  “Diet,  of  Commerce,”  ad  verb. 
Iron;  Porter’s  “Progress  of  the  Nation,”  p.  520;  Statistical  Abstract  of  the 
United  Kingdom. 


52 


ECONOMIC  HISTORY. 


\ 


made  at  the  exact  period  at  which  this  history  commences. 
The  coal-miner  in  his  underground  calling  was  constantly 
exposed  to  the  dangers  of  fire-damp,  and  was  liable  to  be 
destroyed  without  a  moment’s  notice  by  the  most  fearful 
catastrophe.  In  the  year  in  which  the  great  French  war 
was  concluded,  Sir  Humphrey  Davy  succeeded  in  perfecting 
his  safety-lamp,  an  invention  which  enabled  the  most  dan¬ 
gerous  mines  to  be  worked  with  comparative  safety,  and 
thus  augmented  to  an  extraordinary  extent  the  available 
supplies  of  coal.1 

Humphrey  Davy  was  the  son  of  a  wood-carver  of  Pen¬ 
zance,  and  early  in  life  was  apprenticed  to  a  local  apothe¬ 
cary.  Chance  —  of  which  other  men  would  perhaps  have 
failed  to  avail  themselves  —  gave  the  lad  an  opportunity  of 
cultivating  his  taste  for  chemistry.  A  French  surgeon, 
wrecked  on  the  coast,  to  whom  Davy  had  shown  some  kind¬ 
ness,  gave  him  a  case  of  surgical  instruments,  and  “the 
means  of  making  some  approximation  to  an  exhausting 
engine.”  Watt’s  son,  Gregory  Watt,  was  ordered  to  winter 
in  Cornwall  for  his  health,  and  happened  to  take  apartments 
in  the  house  of  Davy’s  mother.  “Another  accident  threw 
him  in  the  way  of  Mr.  Davies  Giddy,  a  cultivator  of  natural 
as  well  as  mathematical  science.  ”  Giddy  “  gave  to  Davy 
the  use  of  an  excellent  library;”  he  “introduced  him  to  Dr. 
Beddoes,”  who  made  his  young  friend  the  head  of  “a  pneu¬ 
matic  institution  for  the  medical  use  of  gases,”  which  he 
was  then  forming.  The  publication,  soon  afterwards,  of  a 
fanciful  paper  on  light  and  heat  gave  Davy  a  considerable 
reputation.  He  was  successively  chosen  assistant  lecturer 
in  chemistry,  and  sole  chemical  professor  of  the  Royal  In¬ 
stitution.  While  he  held  this  office  his  inquiries  induced 
him  to  investigate  the  causes  of  the  fearful  explosions  which 
continually  took  place  in  coal  mines.  He  soon  satisfied 
himself  that  carburetted  hydrogen  is  the  cause  of  fire-damp; 
and  that  it  will  not  explode  unless  mixed  with  atmospheric 
air  “in  proportions  between  six  and  fourteen  times  its 
bulk ;  ”  and  “  he  was  surprised  to  observe  in  the  course  of 

1  Porter’s  “Progress  of  the  Nation,”  p.  277 ;  McCulloch,  ad  verb.  Coal. 


THE  GREAT  INVENTIONS. 


53 


his  experiments,  made  for  ascertaining  how  the  inflamma¬ 
tion  takes  place,  that  the  flames  will  not  pass  through  tubes 
of  a  certain  length  and  smallness  of  bore.  He  then  found 
that,  if  the  length  be  diminished  and  the  bore  also  reduced, 
the  flames  will  not  pass;  and  he  further  found  that  by  mul¬ 
tiplying  the  number  of  the  tubes  this  length  may  be  safely 
diminished,  provided  the  bore  be  proportionally  lessened. 
Hence  it  appeared  that  gauze  of  wire,  whose  meshes  were 
only  one  twenty-second  of  an  inch  in  diameter,  stopped  the 
flame  and  prevented  the  explosion.  ” 1  These  successive 
discoveries,  the  results  of  repeated  experiments  and  careful 
thought,  led  to  the  invention  of  the  safety-lamp.  The  first 
safety-lamp  was  made  in  the  year  1815.  There  is  some  sat¬ 
isfaction  in  reflecting  that  the  very  year  which  was  memo¬ 
rable  for  the  conclusion  of  the  longest  and  most  destructive 
of  modern  wars,  was  also  remarkable  for  one  of  the  most 
beneficial  discoveries  which  have  ever  been  given  to-  man¬ 
kind.  Even  the  peace  of  Paris  did  not  probably  save  more 
life  or  avert  more  suffering  than  Sir  Humphrey  Davy’s  in¬ 
vention.  The  gratitude  of  a  nation  properly  bestowed  titles 
and  pensions,  lands  and  houses,  stars  and  honors,  on  the 
conqueror  of  Napoleon.  Custom  and  precedent  only  allowed 
inferior  rewards  to  the  inventor  of  the  safety-lamp.  Yet 
Hargreaves  and  Arkwright,  Crompton  and  Cartwright,  Watt 
and  Davy,  did  more  for  the  cause  of  mankind  than  even 
Wellington.  Their  lives  had  more  influence  on  their  coun¬ 
try’s  future  than  the  career  of  the  great  general.  His 
victories  secured  his  country  peace  for  rather  more  than  a 
generation.  Their  inventions  gave  Great  Britain  a  commer¬ 
cial  supremacy  which  neither  war  nor  foreign  competition 
has  yet  destroyed. 

A  series  of  extraordinary  inventions,  at  the  commence¬ 
ment  of  the  present  century,  had  supplied  Great  Britain 
with  a  new  manufacturing  vigor.  Hargreaves,  Arkwright, 
Crompton,  and  Cartwright  had  developed,  to  a  remarkable 

degree,  the  producing  power  of  man;  Watt  had  given  a  new 
* 

1  See  Brougham’s  “Men  of  Letters  and  Science,”  p  4G2.  The  life  of  Davy 
is  admirably  told  by  Lord  Brougham. 


54 


ECONOMIC  HISTORY. 


significance  to  their  inventions  by  superseding  the  feeble 
and  unequal  forces  which  had  hitherto  been  used,  with  the 
most  tractable  and  powerful  of  agents.  And  Davy,  by  his 
beneficent  contrivance,  had  enabled  coal  to  be  won  with 
less  danger,  and  had  relieved  the  miner’s  life  from  one 
of  its  most  hideous  perils.  The  ingenuity  of  these  great 
men  had  been  exercised  with  different  objects ;  but  the  in¬ 
ventions  of  each  of  them  had  given  fresh  importance  to  the 
discoveries  of  the  others.  The  spinning-jenny,  the  water- 
frame,  and  the*  mule  would  have  been  deprived  of  half  their 
value  if  they  had  not  been  supplemented  with  the  power- 
loom;  the  power-loom  would,  in  many  places,  have  been 
useless  without  the  steam-engine;  the  steam-engine  would 
have  been  idle,  had  it  not  been  for  coal ;  the  coal  would 
not  have  been  won  without  danger,  had  it  not  been  for  Sir 
H.  Davy.  Coal,  then,  was  the  commodity  whose  extended 
use  was  gradually  revolutionizing  the  world ;  and  the  popu¬ 
lation  of  the  world,  as  the  first  consequence  of  the  change, 
gradually  moved  towards  the  coal  fields.  The  change  was 
just  commencing  at  the  beginning  of  the  present  century; 
it  was  proceeding  with  rapid  strides  at  the  period  at  which 
this  history  opens;  its  ultimate  effects  will  be  seen  later 
on  in  this  work.  The  time  was  to  come  when  the  coal  meas¬ 
ures  of  England  were  to  draw  away  the  population  of  Ire¬ 
land,  to  weaken  the  power  of  the  southern  agricultural 
counties,  to  give  predominance  to  the  north  of  England, 
and  by  these  results  to  involve  a  political  revolution. 


CA USES  OF  THE  FRENCH  REVOLUTION. 


55 


III. 

ECONOMIC  CAUSES  OF  THE  FRENCH 

REVOLUTION. 

From  Von  Sybel’s  French  Revolution,1  Vol.  I.  pp.  21-53. 

IN  order  to  bring  this  matter,  in  its  details,  more  clearly 
before  us,  we  may  pass  in  review  the  three  great  classes 
into  which  the  French  people  were  divided  according  to  their 
occupation.2  By  far  the  most  important  of  these  occupa¬ 
tions  at  that  period  was  agriculture.  Nearly  21,000,000 
out  of  25,000,000  of  inhabitants  were  employed  in  tilling  the 
soil.  Of  the  51,000,000  hectares  of  which  the  whole  king¬ 
dom  is  composed,  35,000,000  were  destined  for  cultivation, 
that  is,  rather  less  than  at  the  present  day,  but  more  than 
twice  as  much  as  is  now  under  cultivation  in  England.  It 
has  often  been  imagined  that  the  property  of  these  great 
masses  of  land  was  almost  entirely  in  the  hands  of  the 
church,  the  monasteries,  the  nobility,  and  the  financiers; 
and  that  before  1789  only  large  estates  ^existed,  while  the 
class  of  small  proprietors  was  created  by  the  Revolution. 
Some  consider  this  supposed  change  as  the  highest  glory, 
and  others  as  the  greatest  calamity  of  modern  times;  but 
all  are  agreed  as  to  the  fact,  and  the  more  so,  because  it  was 
continually  proclaimed  in  the  debates  of  "the  revolutionary 
assemblies.  But  on  closer  examination  we  shall  find  that 
the  effects  of  the  feudal  system  upon  agriculture  are  not  to 

1  London:  J.  Murray,  1867. 

2  In  drawing  up  the  following  statement  we  have  chiefly  consulted  the 
“  Statistique  ministerielle  de  la  France,”  and  the  admirable  works  of  Moreau 
de  Yonne ;  and  also  Lavergne,  “  Lconomie  rurale.”  The  latter  gives  much 
information  respecting  the  earlier  state  of  things,  which  now  and  then,  however, 
requires  examination  and  correction. 


56 


ECONOMIC  HISTORY. 


be  looked  for  in  Ibis  direction.  We  cannot  rank  the  author¬ 
ity  of  the  revolutionary  orators  very  high,  both  because  they 
had  a  political  interest  in  breaking  up  the  large  estates  for 
the  advantage  of  the  city  proletaries,  and  because  they 
always  showed  themselves  fabulously  ignorant  of  statistics. 
If  we  examine  the  state  of  things  before  1789  we  shall  find 
that  —  apart  from  the  feudal  tenures  and  the  church  property 
—  even  the  old  French  law  of  inheritance  by  no  means 
favored  the  accumulation  of  estates.  The  nobility,  indeed, 
were  often  heard  to  complain  that  the  roturiers  were  con¬ 
stantly  getting  possession  of  land;  which  is  intelligible 
enough,  since  the  moneyed  classes  were  continually  gaining 
ground  on  the  ancient  aristocracy.  It  follows  that  there  was 
nothing  in  the  circumstances  of  the  age  to  render  the  division 
of  land  impossible ;  and  one  of  the  most  credible  witnesses, 
after  three  years’  investigation  in  all  the  French  provinces, 

{  tells  us,  as  the  result  of  his  observations,  that  about  a  third 
of  the  land  was  held  by  small  proprietors,  who  were  suffi¬ 
ciently  prosperous  in  Flanders,  Alsace,  Bearn,  and  the  north 
of  Bretagne ;  but  in  other  parts,  especially  in  Lorraine  and 
Champagne,  poor  and  miserable.  The  division  of  property, 
he  observes,  is  carried  to  too  great  an  extent :  “  I  have  fre¬ 
quently  seen  properties  of  ten  roods  with  a  single  fruit-tree; 
excessive  division  ought  to  be  forbidden  by  law.”  The  wit¬ 
ness  is  Arthur  Young,  one  of  the  first  agriculturists  of  the 
period  in  Europe,  who  gave  this  testimony  after  indefati¬ 
gable  inquiry;  and  his  report  is  confirmed  by  native  author¬ 
ities.  “The  subdivision  of  land,”  says  Turgot,  “is  carried 
to  such  an  extent  that  a  property  only  just  sufficient  for 
one  family  is  divided  among  five  or  six  children.”  “The 
landed  estates,”  writes  an  intendcint,  “are  broken  up  syste¬ 
matically  to  a  very  alarming  degree;  the  fields  are  divided 
and  subdivided  ad  infinitum ,”1  Such  was  the  case  among 
the  small  proprietors;  the  other  two  thirds  of  the  soil  was 
entirely  in  the  possession  of  the  great  land-owners,  — consist¬ 
ing  partly  of  the  nobility  and  clergy,  and  partly  of  magis¬ 
trates  and  financiers.  We  shall  presently  inquire  in  what 
1  Quoted  by  Tocqueville,  “  L’Ancien  Regime,”  p.  GO. 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


57 


ipannej^JJ^jjturned  their  Jandsjbo  profit  :  but  we  may  first 
of  all  observe  that  a  middle  class  of  proprietors,  substantial 
enough  to  derive  from  their  land  a  sufficient  livelihood,  and 
yet  humble  enough  to  be  bound  to  constant  and  diligent  labor, 
was  entirely  wanting.  In  the  present  day  the  landed  pro¬ 
prietors  of  France  may  be  divided  into  three  sections,  each 
of  which  possesses  about  one  third  of  the  productive  soil  of 
the  country.  Eighteen  million  hectares  belong  to  183,000 
great  landed  owners;  fourteen  millions  to  700,000  proprie¬ 
tors  of  the  middle  class,  and  fourteen  millions  to  not  quite 
four  millions  of  peasant  owners.1  When  we  compare  these 
figures  with  those  of  the  pre-revolutionary  period  we  find  the 
number  of  poor  possessors  exactly  corresponding  to  one  an¬ 
other  ;  and,  what  is  very  remarkable,  they  are  almost  exactly 
the  same  in  1831  as  in  1815.  The  most  fearful  storms  pass 
over  the  surface  of  the  land  without  producing  any  change  in 
these  relations.  But  what  the  movement  of  1.789 — The  eman¬ 
cipation  of  the  soil,  and~^!vn~equility  —  did  produce  is  this 
middle  class  of  proprietors,  which  now  possesses  one  third  of 
the  land.  It  must  be  confessed  that  this  is  a  most  remark¬ 
able  result.  How  often  has  it  been  announced  by  feudalists 
and  socialists  that  entire  freedom  of  trade  would  inevitably 
lead  to  the  annihilation  of  the  middle  classes,  and  leave 
nothing  but  millionnaires  and  proletaries!  We  here  see 
the  very  contrary  proved  by  one  of  the  grandest  historical 
facts.  The  feudal  system,  by  its  restrictions,  crushed  the 
agricultural  middle  class;  the  rule  of  freedom  created  it 
afresh.  Let  us,  however,  consider  the  position  of  these  lords 
of  the  soil  and  their  dependents  more  closely. 

The  first  fact  which  meets  us  in  this  investigation  is  an 
unhappy  one.  It  was  only  an  excessively  small  minority  of 
the  great  land-owners  who  concerned  themselves  about  their 
estates  and  tenants.  All  who  were  at  all  able  to  do  so 
hurried  away  to  the  enjoyments  of  the  court  or  the  capital, . 
and  only  returned  to  their  properties  to  fill  the  purse  which 
had  been  emptied  by  their  excesses.  There  they  lived  in 

1  Cochut,  “  Revue  de  Deux  Mondes,”  September,  1848 ;  Rossi,  “  Iiconomie 
politique,”  p.  325,  et  seq. 


58 


ECONOMIC  HISTORY. 


miserly  and  shabby  retirement;  sometimes  in  wretchedly 
furnished  castles,  shunned  by  the  peasants  as  pitiless  credi¬ 
tors  ;  sometimes  in  the  midst  of  forests  and  wastes,  that  they 
might  have  the  pleasures  of  the  chase  close  at  hand.  They 
took  as  little  interest  in  intellectual  subjects  as  in  agricul¬ 
tural  affairs,  and  cherished  little  or  no  intercourse  with 
/ 

their  neighbors,  —  partly  from  parsimony,  and  partly  from  the 
entire  want  of  local  roads.  When  the  period  of  fasting  was 
over,  they  rushed  eagerly  back  to  the  alluring  banquets  of 
Paris  and  Versailles.  The  number  of  exceptions  to  this 
melancholy  rule  was  so  small  as  to  exercise  no  influence  on 
the  general  condition  of  the  country. 

While  these  gentlemen  were  squandering  the  produce  of 
their  estates  in  aristocratic  splendor,  their  fields  were  let  out 
in  parcels  of  ten  or,  at  most,  fifteen  hectares ,  to  the  so-called 
mStayers ,  who  did  not  pay  a  fixed  rent,  but  generally  half 
the  gross  produce,  and  received  from  the  owner,  in  return, 
their  first  seed-corn,  their  cattle,  and  agricultural  imple¬ 
ments.1  This  system  yielded  a  wretched  existence  for  the 
tenants  themselves,  and  reduced  the  estates  to  a  miserable 
condition,  but  it  brought  the  owners  a  large  though  uncertain 
income.  The  latter,  who  only  saw  their  estates  as  travellers, 
were  accustomed  to  farm  out  the  collection  of  their  dues, 
generally  to  a  notary  or  an  advocate,  who  treated  the  tenants 
with  merciless  severity. 

The  peasants,  in  their  turn,  neglected  the  cultivation  of 
corn  —  of  which  they  had  to  give  up  a  moiety  —  for  any 
chance  occupation  the  whole  profit  of  which  fell  to  them¬ 
selves  ;  they  used  their  oxen  rather  for  purposes  of  trans¬ 
port  than  for  ploughing,  fattened  their  geese  in  their  own 
wheat  fields,  and,  above  all,  introduced  the  system  of  alter¬ 
nating  crop  and  fallow,  in  order  to  get  a  greater  extent  of 
pasture,  and  consequently  a  larger  number  of  cattle.  This 
was  a  personal  gain  to  themselves,  but  evidently  brought  no 
advantage  to  the  estate.  A  system  of  tillage,  in  short,  pre¬ 
vailed  without  industry,  without  science,  and,  above  all,' 

1  Quesnay  in  Daire,  “  Physiocrates,”  p.  219,  et  seq. ;  Young’s  “  Travels,” 
2d  ed.  vol.  i.  p.  355;  Lullin  de  Chateauvieux,  vol.  i.  p.  270. 


CAUSES  OF  THE  FRENCH  REVOLUTION . 


59 


without  capital.  It  has  been  calculated  that  the  average 
amount  of  capital  employed  at  that  period  in  the  French 
metairies  was  from  forty  to  sixty  francs  to  the  hectare  ; 
while  in  England,  at  the  same  time,  the  average  amounted  to 
two  hundred  and  forty  francs. 1  The  result  was,  of  course,  a 
wretched  one ;  they  only  reckoned  upon  a  crop  of  from  seven 
to  eight  hectolitres  of  wheat  to  the  hectare ,  — the  increase 
being  from  five  to  six  fold ;  while  the  English  farmer  of  that 
time  obtained  a  twelve-fold  increase..  It  was  impossible  for 
the  peasant  under  such  circumstances  to  gain  a  livelihood ; 
the  produce  of  ten  hectares  was  scarcely  sufficient  to  support 
his  family,  and  sale  and  profit  were  out  of  the  question. 
The  man  who  is  thus  condemned  to  pass  his  life  in  starva-  f 
tion  soon  learns  to  fold  his  hands  in  idleness.  A  con¬ 
stantly  increasing  extent  of  country  lay  uncultivated,  which 
Quesnay,  in  1750,  estimated  at  a  quarter  of  the  arable  land 
of  France,  and  Arthur  Young,  in  1790,  at  more  than 
9,000,000  hectares.  Millions  of  rural  dwellings  had  no 
aperture  in  them  but  the  door,  or  at  most  one  window ; 2  the 
people  had  no  clothing  but  a  home-made,  coarse,  and  yet  not 
thick,  woollen  cloth;  in  many  provinces  every  one  went 
barefoot,  and  in  others  only  wooden  shoes  were  known.  The 
food  of  the  people  was  gruel  with  a  little  lard ;  in  the  even¬ 
ing  a  piece  of  bread,  and  on  great  occasions  a  little  bacon ; 
but  besides  this  no  meat  for  months  together,  and  in  many 
districts  no  wine  at  all.3  The  mental  condition  of  the  peo¬ 
ple  was  in  accordance  with  their  external  circumstances. 
Books  and  newspapers  were  as  little  known  in  the  villages  as 
reading  and  writing.  The  peasants  depended  for  instruction 
on  their  pastors  and  parish  clerks,  proletaries  like  themselves, 
who  very  seldom  got  beyond  the  horizon  of  the  church  steeple. 
The  Church  was,  after  all,  the  only  institution  that  threw  an 
intellectual  spark  into  their  wretched  life ;  but  unfortunately 
their  religious  impulses  were  strongly  mixed  with  barbarism 

1  Arthur  Young,  vol.  i.  p.  435.  The  elder  Mirabeau  reckons  for  the  whole 
of  France,  66  francs  to  the  arpent. 

2  This  is  still  the  case. 

3  Reports  of  the  Prefects  to  the  Ministry,  1803. 


60 


ECONOMIC  HISTORY. 


and  superstition.  In  many  large  districts  of  the  south  the 
peasants  had  no  other  idea  of  a  Protestant  than  as  -of  a  dan¬ 
gerous  magician  who  ought  to  be  knocked  on  the  head.  Their 
own  faith,  moreover,  was  interwoven  with  a  multitude  of  the 
strangest  images  of  old  Celtic  heathenism.  Of  the  world 
outside  they  heard  nothing,  for  there  was  next  to  no  traffic 
or  travelling  in  the  country.  There  were  some  royal  roads, 
magnificently  made,  and  sixty  feet  in  breadth,  —  splendid 
monuments  of  monarchical  ostentation.  On  these,  however, 
up  to  1776,  only  two  small  coaches  ran,1  throughout  the 
whole  of  France;  and  the  traveller  might  pass  whole  days 
without  getting  sight  of  any  other  vehicle.2  Only  few  vil¬ 
lages,  in  the  most  favored  provinces,  possessed  cross-roads 
to  these  great  highways,  or  to  the  nearest  market  town. 
And  thus  the  whole  existence  of  these  people  was  passed  in 
toil  and  privation;  without  any  pleasures  except  the  sight 
of  the  gaudy  decorations  of  a  few  church  festivals ;  without 
any  change,  save  when  hunger  drove  an  individual,  here  and 
there,  to  seek  day-labor  in  the  towns,  or  into  military  ser¬ 
vice.  It  was  seldom  that  such  a  one  ever  returned  to  his 
father’s  house,  so  that  his  fellow-villagers  gained  no  advan¬ 
tage  from  his  wider  experience. 

Under  these  circumstances  the  relation  between  peasant 
and  lord  was  naturally  a  deplorable  one.  What  we  have 
already  said  sufficiently  characterizes  a  community  in  which 
all  the  enjoyments  fell  to  the  rich,  and  all  the  burdens  were 
heaped  upon  the  poor.  In  aristocratic  England  at  this 
period,  a  quarter  of  the  gross  proceeds  was  considered  a 
high  rent  for  a  farm,  and  the  owner,  moreover,  paid  large 
tithes  and  poor-rates.3  In  France,  half  the  proceeds  was  the 
usual  rent;  and  the  owners  were  exempted  by  their  privileges 
from  many  public  burdens,  which  fell  with  double  weight 
upon  the  wretched  metayers.  Thus,  the  produce  of  the 
French  land,  as  compared  with  the  English,  was  nine  to 
fourteen,  while  the  rents  of  'an  English  land-owner  were  at 

1  E.  Daire,  “  Introduction  aux  CEuvres  de  Turgot.” 

2  Young’s  “  Travels.” 

8  Yvernois,  “  Tableau  des  Pertes,”  etc. 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


61 


the  rate  of  two  and  three  fourths  per  cent,  and  those  of  the 
French  land-owner  three  and  three  fourths  per  cent.1 

The  deficiency  in  the  product  of  the  land,  therefore, 
affected  the  gains  of  the  little  farmer  doubly.  In  addition 
to  this  he  was  burdened  by  a  nufuber  of  feudal  services,  by 
forced  labor  on  the  lands  of  his  lord,  by  tithes  to  the  Church, 
and  by  the  obligation  to  make  roads  for  the  State.  The 
landlord,  who  tried  to  sell  his  rent  in  kind  as  dearly  as  pos¬ 
sible,  wished  for  high  prices  of  corn;  the  peasant,  who,  after 
paying  his  dues,  did  not  raise  enough  for  his  own  family, 
longed,  like  the  city  proletary,  for  low  prices.  In  short,! 
these  two  classes,  so  intimately  connected  with  one  another,? 
had  nothing  at  all  in  common;  in  education,  in  interests 
and  enjoyments,  they  were  as  widely  separated  as  the  in¬ 
habitants  of  different  quarters  of  the  globe,  and  regarded 
each  other  respectively  with  contempt  and  hatred.  When 
the  peasant  looked  upon  the  towers  of  his  lord’s  castle  the 
dearest  wish  of  his  heart  was  to  burn  it  down,  with  all  its 
registers  of  debt.  Here  and  there  a  better  state  of  things 
existed;  but  we  can  only  bring  forward  two  exceptions  to 
the  melancholy  rule,  extending  over  large  tracts  of  country. 
In  Anjou  the  system  of  metairie  prevailed,  as  in  Lower 
Bretagne  and  Guienne;  and  yet  in  the  former  province  the 
peasants  were  prosperous,  and  the  noblemen  beloved.  Lower 
Poitou  was  the  only  province  from  which  the  nobles  had  not 
allowed  themselves  to  be  enticed  into  the  whirlpool  of  court 
life.  The  nobleman  dwelt  in  his  own  castle,  the  real  lord 
of  his  domains,  the  cultivator  of  his  fields,  the  guardiah  of 
his  peasants.  He  advanced  them  money  to  purchase  the 
necessary  stock,  and  instructed  them  in  the  management  of 
their  cattle;2  the  expulsion  of  a  tenant  was  a  thing  unheard 
of ;  the  laborer  was  born  on  the  estate,  and  the  landlord  was 
the  godfather  of  all  his  farmers’  children.  He  was  often 
seen  going  to  market  with  his  peasants,  to  sell  their  oxen 
for  them  as  advantageously  as  possible.  His  mental  horizon, 
however,  did  not  extend  beyond  these  honorable  cares;  he 

1  Young. 

2  Sauvegrain,  “  Considerations  sur  la  Population,”  etc.  Paris,  1806. 


62 


ECONOMIC  HISTORY. 


honored  God  and  the  King,  labored  in  his  own  fields,  was  a 
good  sportsman  and  toper,  and  knew  as  little  of  the  world 
and  its  civilization  as  his  tenants. 

In  the  north  of  the  kingdom  a  more  modern  state  of  things 
had  grown  up.  There,  wealthy  farmers  were  to  be  seen, 
who  held  their  land  on  lease  at  a  fixed  money  rental, — 
which  was  settled  according  to  the  amount  of  the  taxes  to 
which  they  were  liable,  —  and  who  brought  both  skill  and 
capital  to  the  management  of  their  land.  This  was  the 
regular  practice  in  Flanders,  Artois,  Picardy,  Normandy, 
the  Isle  of  France,  and  other  smaller  districts.  In  these 
parts  the  landlords  had  a  certain  revenue,  and  their  land 
yielded  twice  as  much  as  that  which  was  in  the  hands  of  the 
metayers.  The  whole  country  wore  the  appearance  of  a  gar¬ 
den,  and  the  poorer  neighbors  found  lucrative  employment 
at  the  stately  farmhouses.  These  were  the  same  provinces 
in  which  Arthur  Young  met  with  small  proprietors  in  a  tol¬ 
erable  condition.  If  a  peasant  in  this  part  of  the  country 
possessed  a  small  strip  of  land  near  his  cottage,  large  enough 
to  grow  some  vegetables,  food  for  a  goat,  or  a  few  vines,  he 
earned  sufficient  to  supply  the  rest  of  his  wants,  in  day 
wages,  from  the  farmers,  or,  as  a  weaver,  from  the  neighbor¬ 
ing  manufacturers. 

His  was  a  condition  similar  to  the  normal  one  of  the  peas¬ 
ant  proprietors  in  France  at  the  present  day;  who  are  not 
reduced  farmers,  but  laborers  who  have  invested  their  sav¬ 
ings  in  land.1  It  was  more  difficult  for  these  people  to  make 
a  livelihood  at  that  time  than  now,  because  there  wrere  fewer 
manufacturers  and  wealthy  agriculturists.  Except  in  the 
above-mentioned  provinces,  these  petty  proprietors  were 
equally  wretched  and  hopeless  with  the  metayers  by  whom 
they  were  surrounded;  their  only  object  was  to  rent  a 
metairie  in  addition  to  their  own  pittance  of  land.  They 
were  in  fact  entirely  lost  sight  of  among  the  metayers  ;  and 
this  is  the  reason  that  French  writers,  in  their  descriptions 
of  the  so-called  petite  culture  (plot  farming),  never  make  any 
special  mention  of  them,  but  always  confound  them  with  the 

1  Rossi,  1.  c. 


CA  USES  OF  THE  FRENCH  REVOLUTION. 


68 


more  numerous  class  by  which  they  were  surrounded.  All 
authorities  are  agreed  in  estimating  the  amount  of  land  culti¬ 
vated  in  small  parcels  at  27,000,000  hectares ,  while  only 
9,000,000  were  held  at  a -money  rent.  The  former,  there¬ 
fore,  was  nearly  equally  divided  between  the  small  owners 
and  the  metayers ,  who  paid  their  rent  in  kind. 

In  France,  at  the  present  day,  nearly  28,000,000  hectares 
are  cultivated  by  small  proprietors  and  metayers ;  about 
8,000,000  1  (the  same  as  in  1780)  by  tenants  paying  a  money 
rent;  and  rather  more  than  nine  and  a  half  millions  by 
wealthy  landlords.2  Hence  we  can  clearly  see  what  the 
French  Revolution  has  done  for  French  agriculture.  Not 
only  did  it  create  the  middle  class  of  land-owners,  but 
greatly  promoted  a  more  rational  system,  of  tillage.  •  About 
four  million  hectares  have  been  rescued  from  the  petite  cul¬ 
ture,  and  an  equal  number  redeemed  from  utter  barrenness. 
The  breadth  of  land  standing  at  a  money  rent  is  exactly  the 
same  as  before  the  Revolution.  The  increase  is  entirely  in 
the  properties  of  rich  or  substantial  land-owners,  who  man¬ 
age  their  own  estates,  —  which  indicates  a  change  to  more 
zealous  industry,  coupled  with  the  employment  of  greater 
capital.  The  extent  occupied  by  the  metayers  is  still  very 
great,  and  the  condition  of  those  who  are  subject  to  it  but 
little  improved,  notwithstanding  the  abolition  of  socage  and 
seigniorial  rights.  It  will  be  one  of  our  most  important 
tasks  to  examine  The  several  events  and  tendencies  of 
the  Revolution  in  relation  to  their  effects  on  the  rural 
population. 

If  we  turn  our  attention  to  the  towns  of  ancient  France  we 
find  that  similar  causes  produced  effects  corresponding  to 
those  we  have  just  described.  The  civic  offices,  to  which 
persons  had  formerly  been  elected  by  the  districts  or  the 
guilds,  had  been  frequently  filled  up  by  the  crown  in  the 
seventeenth  century ;  and  in  the  eighteenth,  the  great  major¬ 
ity  of  them  were  sold  in  hereditary  possession  to  fill  the  ex- 

1  Quesnai,  Turgot,  Young. 

2  On  this  point  Lullinde,  Chateauvieux,  and  Cochut  are  in  the  main  agreed. 
Lavergne’s  figures  are  somewhat  different,  but  the  general  result  is  the  same. 


64 


ECONOMIC  HISTORY. 


chequer.1  The  government  of  the  towns,  therefore,  was  in 
the  hands  of  a  close  corporation  consisting  of  a  few  families, 
who,  generally  speaking,  allowed  themselves  to  be  infected 
with  the  indolent  and  self-seeking  spirit  of  the  central  gov¬ 
ernment.  Associated  with  these  were  the  families  of  the 
moneyed  aristocracy,  the  members  of  the  great  financial 
companies,  the  farmers  of  the  indirect,  and  the  collectors  of 
the  direct,  taxes,  the  shareholders  of  the  trading  monopolies, 
and  the  great  bankers.  These  circles,  too,  were  either  le¬ 
gally  or  virtually  closed  to  the  general  world.  The  bourse 
was  ruled  by  an  aristocracy,  to  which  only  birth,  or  the  per¬ 
mission  of  government,  could  give  access.  Their  activity 
was  of  course  necessarily  centred  in  Paris.  Indeed,  they 
stamped  their  own  character  on  this  city  to  a  degree  which 
would  be  impossible  in  our  age,  notorious  though  it  be  as 
the  epoch  of  the  rule  of  paper.  Every  one  knows  to  what 
a  dizzy  and  ruinous  height  stock-jobbing  was  carried  by  Law 
in  the  beginning  of  the  century ;  and  from  that  time  forward 
its  operations  were  never  suspended,  and  all  who  had  wealth 
or  credit  engaged  in  it  with  reckless  greediness.  Kings, 
nobles,  ministers,  clergy,  and  parliaments,  one  and  all,  took 
part  in  these  transactions;  and  the  chronic  deficit,  and  in¬ 
creasing  debts,  of  the  treasury  afforded  constant  opportuni¬ 
ties  of  involving  the  State,  and  making  a  profit  out  of  its 
embarrassments.  We  may  confidently  assert  that,  as  com¬ 
pared  with  the  present  day,  the  speculative  swindling  of  that 
age  was  as  prevalent  and  as  shameless  as  its  immorality. 
Paris  was  not  at  that  time  a  manufacturing  town,  and  its 
wholesale  trade  was  insignificant;  with  few  exceptions, 
therefore,  the  industry  of  the  city  consisted  in  retail  trade 
and  the  negotiation  of  bills  of  exchange.  It  is  not  the  least 
characteristic  feature  of  the  indolent  and  selfish  licentious¬ 
ness  into  which  the  higher  classes  of  a  great  nation  had 
fallen,  that  of  all  securities,  life  annuities  were  most  in 
favor;  by  means  of  which  the  purchaser  procured  high  inter¬ 
est  for  himself,  while  he  robbed  his  children  of  the  capital. 

1  Depping,  “  Correspondance  administrative  de  Louis  XIV.,”  vol.  ii.,  Intro¬ 
duction. 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


65 


, 


The  trade  and  commerce  of  the  whole  empire  was  fettered! 
by  the  restrictions  of  guilds  and  corporations.  The  princi¬ 
ples  on  which  they  were  conducted  dated  from  Henry  III.  r 
who  was  the  first  to  promulgate  the  proposition  that  the  king 
alone  can  grant  the  right  to  labor,  —  a  maxim  which  con¬ 
tains  the  whole  doctrine  of  the  socialists  from  a  monarchical 
point  of  view.  The  masters  of  every  handicraft  managed 
its  internal  affairs,  allowed  no  one  to  practise  it  who  did 
not  belong  to  their  guild,  and  admitted  no  one  to  their 
privileges  until  he  had  passed  an  examination  of  his  quali¬ 
fication  before  themselves.  Originally  many  trades  were 
free  from  this  organization,  until  these  too  were  injuriously 
affected  by  the  financial  necessities  of  the  State,  —  when  the 
exclusive  rights  of  a  guild  were  sold  to  the  artisans,  as  their 
offices  were  to  the  judges.  The  government  soon  further 
proceeded  to  divide  each  trade  into  several  guilds,  and  made1 
an  exclusive  corporation  of  the  most  insignificant  occupa¬ 
tion.  Thus  the  workers  in  ebony  were  distinguished  from' 
the  carpenters,  the  sellers  of  old  clothes  from  the  tailors, 
and  the  pastry-cooks  from  the  bakers.  The  fruit-women  and 
flower-girls  formed  separate  exclusive  associations,  regulated 
by  formal  and  binding  statutes.  In  the  guilds  of  the  seam¬ 
stresses,  embroiderers,  and  dress-makers,  only  men  were 
admitted  to  the  privileges  of  masters.  A  number  of  these 
statutes,  by  imposing  excessive  fees  and  duties,  rendered  it 
doubly  difficult  for  an  apprentice,  however  capable,  to  obtain 
the  rank  of  master.  Other  enactments  only  admitted  the 
sons  of  masters,  or  the  second  husbands  of  the  widows  of 
masters,  to  the  privileges  of  the  guild.  In  short,  the  power  \ 
of  the  State  was  abused  in  the  most  glaring  manner  for  the  \ 
furtherance  of  exclusive  class  interests.  Those  who  did  not 
belong  to  this  aristocracy  of  trade,  could  only  support  them¬ 
selves  by  the  labor  of  their  hands,  in  a  state  of  eternal  servi¬ 
tude.  Despair  and  famine  drove  the  peasants  from  the 
country  into  the  towns,  where  they  found  no  employment 
open  to  them  but  that  of  day-laborers.  The  important  influ¬ 
ence  which  this  system  exercised  over  the  State  was  clearly 
understood,  both  by  the  privileged  and  the  excluded  classes. 

5 


66 


ECONOMIC  HISTORY. 


When  Turgot  abolished  the  guilds  in  1776,  the  parliament  of 
Paris,  the  princes,  peers,  and  doctors,  unanimously  declared 
that  all  Frenchmen  were  divided  into  close  corporations,  the 
links  of  a  mighty  chain  extending  from  the  throne  to  the 
meanest  handicraft ;  and  that  this  concatenation  was  indis¬ 
pensable  to  the  existence  of  the  State  and  of  social  order.  It 
was  not  long  before  the  guilds  were  re-established  in  accord¬ 
ance  with  this  declaration ;  we  shall  see  how  the  journeymen 
and  apprentices  replied  to  this  unctuous  manifesto  some 
fifteen  years  later. 

The  great  manufacturing  interests  of  the  country  were 
confined  by  the  same  narrow  restrictions.  Since  the  time  of 
Colbert,  who  was  the  real  creator  of  them,  manufactures  had 
been  the  darling  child  of  the  government;  and,  as  is  usually 
the  case  with  darling  children,  had  been  petted  and  tyran¬ 
nized  over  at  the  same  time.  When  Colbert  began  his  oper¬ 
ations  France  produced  neither  the  finer  kinds  of  cloth  nor 
stockings,  neither  silks  nor  glass,  neither  tar  nor  soap. 
The  previously  existing  handicraft,  which  had  been  for  a 
century  in  the  fetters  of  the  guild,  had  done  so  little  to  de¬ 
velop  the  native  manufacturing  talent  of  the  country  that  the 
minister  was  obliged  to  introduce  German,  Swedish,  and 
Italian  workmen.  To  secure  a  sale  in  foreign  countries  he 
prescribed  with  great  exactness  the  sort  of  fabric  which  he 
wished  to  be  produced;  and  to  prevent  competition  from 
without,  he  enacted  a  number  of  prohibitory  and  protective 
duties.  Here,  again,  the  power  of  the  State  intruded  itself 
into  the  sphere  of  private  business,  to  the  advantage  of  the 
manufacturer  and  the  injury  of  the  consumer.  The  same 
system  was  continued  by  his  successors  with  still  worse 
effects,  because  it  was  carried  out  with  all  the  fickleness  and 
irregularity  of  Louis  XV.  ’s  government.  It  is  true  that 
manufacturers  made  great  progress,  and  increased  their 
annual  products  six-fold  from  the  time  of  Colbert  to  that  of 
Necker.1  But  the  statutes  became  more  oppressive  every 
year;  every  new  invention  and  improvement  was  excluded 
by  them;  and  after  1760  no  legislation  could  keep  pace  with 

1  This  was  the  proportion  in  the  woollen  manufacture. 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


67 


the  progress  of  machinery.  Manufacturers,  therefore,  as  is 
everywhere  the  case  under  such  circumstances,  no  longer 
adapted  themselves  to  the  natural  wants  and  capacities  of 
men,  but  immediately  took  an  artificial  and  aristocratic 
direction.  During  Colbert’s  ministry,  while  only  60,400 
hands  were  employed  in  the  manufacture  of  wool,  no  less 
than  17,300  were  engaged  in  lace-making;  and  a  hundred 
years  later,  while  the  manufacture  of  soap  only  produced 
18,000,000  of  francs  a  year,  that  of  hair-powder  was  esti¬ 
mated  at  not  less  than  24,000,000.  The  contrast  between 
the  aristocratic  luxury  of  the  rich  and  the  uncleanly  in¬ 
digence  of  the  populace  can  hardly  be  more  glaringly 
displayed.  Agriculture  experienced  in  every  way  the  dis¬ 
advantages  of  a  system  which  crippled  communication  with 
foreign  countries,  raised  the  price  of  farming  implements, 
and  injuriously  affected  the  home  trade.  In  their  eagerness 
to  protect  manufactures  the  government  had  learned  to  look 
on  the  interests  of  agriculture  as  of  secondary  importance. 
They  accustomed  themselves,  like  the  modern  socialists,  to 
apply  the  word  people  exclusively  to  the  manufacturing 
classes  in  the  towns ;  and  though  they  sacrificed  the  interests 
of  the  latter  in  a  thousand  ways  to  the  privileged  monopolist, 
yet  philanthropy  and  love  of  quiet  co-operated  in  inducing 
them  to  supply  the  necessities  of  the  poorer  artisans,  at  the 
cost  of  the  agricultural  population.  As  supplements  to  the 
protective  and  prohibitory  duties  in  favor  of  manufactures, 
decrees  were  issued  forbidding  the  exportation  of  corn  and  \ 
other  raw  agricultural  products.  By  these  artifices  the  price 
of  the  hectolitre  of  wheat,  which  on  the  average  is  at  present 
nineteen  to  twenty  francs,  was  in  1764  forced  down  to  less 
than  eight  francs.1  Choiseul  then  opened  the  trade,  and  the 
price  rose  to  more  than  fifteen  francs.  A  similar  result 
followed  the  same  measure  in  1775,  during  the  ministry  of 
Turgot;  but  a  return  to  protection  reduced  the  price  once 
more  to  twelve  and  three  fourths  francs,  until  the  Revolu¬ 
tion.  The  city  artisans  had  tolerably  cheap  bread,  but  \ 
nowhere  in  the  kingdom  were  the  farmers  prosperous.  In 

1  Melier,  in  vol.  x.  of  the  “  Memoires  de  l’Academie  royale  de  Medecine.” 


68 


ECONOMIC  HISTORY. 


spite  of  the  most  violent  complaints  from  all  the  provinces, 
the  cause  of  the  evil,  and  consequently  the  evil  itself,  re¬ 
mained  unchanged.  The  government  adhered  to  the  convic¬ 
tion  that  it  was  their  immediate  duty  to  provide  for  the 
maintenance  of  the  population  of  the  towns.  It  seemed  to 
them  a  matter  of  course  that  the  State  should  use  its  political 
power  for  the  advantage  of  its  rulers  and  their  favorites. 
No  one  considered  the  remoter  consequences  of  such  a  prin¬ 
ciple  ;  no  one  asked  the  question,  44  What  if  this  power  should 
fall  into  democratic  hands  ?  ” 

Let  us  endeavor  to  obtain  a  general  view  of  the  wealth  of 
France  at  this  period.  From  the  imperfection  of  official 
information  the  task  is  a  difficult  one,  and  its  results  uncer¬ 
tain.  Even  an  approximation  to  the  truth,  however,  will  not 
be  without  interest,  since,  in  order  not  to  bring  forward  un¬ 
meaning  figures,  we  shall  constantly  institute  a  comparison 
with  the  now  existing  state  of  things. 

The  well-informed  Tolosan,  the  only  authority  on  this  sub¬ 
ject,  estimates  the  total  produce  of  manufactures  at  nine  hun¬ 
dred  and  thirty-one  million  francs  ;  that  of  handicraft  at 
sixty  millions.  At  the  present  day1  the  manufactures  of 
Eastern  France  alone,  not  reckoning  handicraft,  produce 
2,282  millions;  the  sum  total  therefore  has  been  at  least 
quadrupled.  At  the  former  period  it  amounted  to  thirty- 
nine  francs  per  head  of  the  whole  population ;  at  present  we 
might  unhesitatingly  place  it  at  more  than  one  hundred  per 
head.  The  emancipation  of  the  internal  trade  since  1789  has 
not  raised  the  amount  of  property  produced,  but  —  what  has 
so  often  been  called  in  question  —  has  favorably  influenced 
the  manner  in  which  it  is  distributed.  The  daily  wages  of  the 
manufacturing  laborers  in  1788,  according  to  a  rather  high 
estimate,  were  for  men  twenty-six  sous,  and  for  women  fif¬ 
teen.2  They  are  now,  according  to  the  most  numerous  and 
trustworthy  observation,  forty-two  sous  for  men,  and  twenty- 
six  for  women.  The  daily  wages  of  the  agricultural  laborers, 

1  In  1853.  In  1860  a  total  of  five  milliards  was  reached.  Boiteau,  “£tat 
de  la  France  en  1789,”  pr.  506. 

2  Boiteau  thinks  19  to  20  sous. 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


69 


too,  can  certainly  not  be  reckoned  at  more  than  fifteen 
sous1  for  the  year  1789,  or  less  than  twenty-five2  in  the 
present  day.  If  we  further  take  into  account  the  very  con¬ 
siderable  increase  in  the  number  of  working  days,  arising 
from  the  abolition  of  thirty  holidays,  we  shall  find  the  annual 
wages  of  the  earlier  period  to  be  little  more  than  half  what 
they  now  are,  namely,  three  hundred  and  fifty-one  francs  for 
the  manufacturing,  and  one'  hundred  and  fifty-seven  for  the 
agricultural  laborer,  against  six  hundred  and  thirty,  and  three 
hundred  at  the  present  day.  To  appreciate  the  significance 
of  these  results  we  must  compare  the  prices  of  provisions  at 
these  two  periods.  It  appears,  then,  that  before  1789  bread 
was  considered  very  cheap  at  three  sous  per  pound,  and  it 
was  only  in  Paris  that  this  rate  was  a  common  one ;  in  the 
provinces  the  price  was  generally  higher.  In  our  own  times 
the  average  price  for  the  whole  of  France  from  1820  to  1840 
was  seventeen  centimes,  while  at  Paris,  in  1851,  it  was  four¬ 
teen  cents,  —  less,  therefore,  than  the  old  rate  of  three  sous. 
This  seems  out  of  proportion  to  the  price  of  corn,  since  the 
hectolitre  of  wheat  in  1780  cost  from  twelve  to  thirteen 
francs,  and  in  1840  from  nineteen  to  twenty.  This  apparent 
incongruity,  however,  is  accounted  for  by  the  improvement 
in  the  method  of  grinding  and  baking,  by  which  a  third,  or 
even  a  half,  more  weight  of  bread  is  now  obtained  from  the 
same  quantity  of  corn  than  in  the  former  period.3  We  find, 
therefore,  that  the  laborer  received  for  his  wages  little  more 
than  half  the  quantity  of  bread  which  the  modern  workman 
can  obtain  for  what  he  earns.  The  same  proportion  holds 
good  in  other  kinds  of  food,  and  in  regard  to  clothing  the 
comparison  is  still  more  unfavorable  to  the  ante-revolutionary 
period. 

We  shall  discover  the  determinate  cause  of  these  differ¬ 
ences  when  we  come  to  consider  the  main  wealth  of  the 
French  empire, —  the  produce  of  the  soil  in  the  widest  sense 

1  Lavergne  says  30  sous  (p.  57). 

2  Before  1789  the  septier  (240  pounds)  of  wheat  yielded  only  180  pounds  of 
bread.  —  Moniteur,  12  July,  1792,  supplement. 

8  Young,  “  Assembled  Nationale,”  15th  Jan.,  1790,  lltli  Aug.,  1791. 


70 


ECONOMIC  HISTORY . 


of  the  word.  It  would  carry  us  too  far  if  we  were  to  examine 
every  branch  of  the  subject,  and  discuss  all  the  difficulties 
connected  with  it;  it  will  be  sufficient  to  dwell  on  a  few  of 
the  principal  points  of  interest.  Of  wheat,  the  great  staff 
of  life,  the  soil  of  France  produced  before  the  Revolution 
about  40,000,000  hectolitres ,  or  one  hundred  and  sixty-seven 
litres  per  head  of  the  population;  and  in  1840,  70,000,000,  or 
two  hundred  and  eight  litres  per  head.  At  the  former  period 
the  number  of  cattle  was  calculated  at  83,000,000  head,  and 
at  the  present  day  at  49,000,000;  and  there  is  an  equal  in¬ 
crease  in  the  number  of  the  other  domestic  animals.  The 
vineyards  formerly  yielded  27,000,000  hectolitres ,  and  at 
present  37,000,000,  so  that  the  proportion  per  head  is  at  any 
rate  not  lower  than  it  was. 1  And  if  we  take  into  considera¬ 
tion  that  a  number  of  useful  agricultural  products  were  at 
that  time  unknown,  that  a  violent  controversy  was  carried 
on  about  the  wholesomeness  of  potatoes,  that  the  forests 
were  allowed  to  run  to  waste  far  more  than  at  the  present 
day,2  we  shall  not  be  astonished  that  the  best  statist  of 
modern  France  estimates  the  vegetable  product  of  the  French 
soil  (which  now  exceeds  in  value  the  sum  of  6,000  millions) 
at  not  more  than  2, 000  millions  at  the  period  before  the  Revo¬ 
lution.3  The  importance  of  this  fact  is  sufficiently  evident; 
and  we  may  gain  an  idea  of  the  state  of  the  population  before 
1789  by  remembering  that  even  now  the  total  consumption 
of  food  in  France  is  not  greater  in  proportion  to  the  popula¬ 
tion  than  in  Prussia,  and  much  less  than  in  England.4 

Respecting  commerce,  the  third  great  branch  of  national 
wealth,  I  have  but  little  to  say.  I  am  not  aware  that  any 
statistical  data  exist  of  the  internal  traffic  of  France  before 

1  Moreau  de  Yonnes,  from  contemporary  sources.  I  have  followed  him 
because  space  does  not  allow  me  to  give  my  reasons  for  thinking  a  much  more 
unfavorable  state  of  things  in  1770  highly  probable. 

2  “  Memoire  remis  aux  Notables,  1781;”  Young’s  “  Travels,”  2d  ed.  vol.  ii. 
p.  106;  Moreau,  “Agriculture,”  366. 

8  The  calculation  of  Young  agrees  with  this.  Tolosan,  Dedeley  d’Agier, 
Lavoisier,  make  amounts  higher.  (Boiteau,  “  £tat  de  la  France  en  1789,” 
p.  481,  compares  their  statements.)  But  the  uncertainty  of  their  calculations 
is  very  perceptible. 

i  Communications  from  the  Prussian  Statistical  Bureaus,  1851. 


CAUSES  OF  THE  FRENCH  REVOLUTION . 


71 


the  Revolution;  it  was,  no  doubt,  smaller  than  at  the  pres¬ 
ent  day,  in  consequence  of  the  multitude  of  inland  duties. 
And  with  regard  to  the  foreign  commerce  of  the  earlier 
period,  we  have  no  means  of  dividing  the  sum  totals  which 
lie  before  us  into  the  value  of  the  raw  materials  and  the  cost 
of  manufacture,  on  the  one  hand,  and  the  clear  profits  of 
trade,  on  the  other.  It  must  suffice  us  to  gain  a  general  idea 
of  the  relation  between  the  two  periods  from  the  summary 

\ 

statement  that  in  the  custom-house  registers  immediately 
before  the  Revolution  the  annual  imports  are  stated  at 
576,000,000,  and  the  exports  at  540,000,000,  while  as  early 
as  1836  the  former  amounted  to  905,000,000,  and  the  latter 
to  961,000,000,  and  in  1857  both  imports  and  exports  had 
risen  to  a  value  of  more  than  1,800,000,000.  Taking  all  in 
all,  therefore,  France  under  the  old  monarchy  was  four  times 
as  poor  in  manufactures,  three  times  as  poor  in  agriculture, 
and  more  than  three  times  as  poor  in  commerce,  as  it  is  in 
the  present  day.  We  must  bear  this  result  well  in  mind 
when  we  try  to  form  a  judgment  respecting  the  finances  of 
the  ancien  regime .  A  budget  of  six  hundred  millions 
weighed  as  heavily  upon  the  resources  of  the  country  at  that 
period  as  a  budget  of  1,800,000,000  would  now,  and  conse¬ 
quently  a  deficit  of  100,000,000  was  equivalent  to  one  of 
300,000,000  in  our  own  times.  Such  a  deficit  actually 
existed  when  Louis  XVI.  mounted  the  throne.  It  is  there¬ 
fore  easy  to  conceive  that  his  attention  should  be  strongly 
turned  to  the  restoration  of  the  balance  between  income  and 
expenditure,  and  that  his  vain  endeavors  in  this  direction 
should  shake  the  fabric  of  the  State  to  its  very  foundation. 

A  whole  volume  would  be  necessary  to  detail  the  different 
schemes  of  reform  which  were  brought  forward  between  the 
accession  of  Louis  XVI.  and  the  outbreak  of  the  Revolution. 
It  will  be  sufficient  for  our  purpose  to  notice  the  chief  points, 
which  have  an  important  bearing  on  the  antecedents  and  the 
actual  events  of  that  mighty  movement. 

Louis  XVI.  himself,  as  no  one  can  doubt  who  has  ap¬ 
proached  the  sources  of  the  history  of  this  period,  entered 
on  the  task  of  government  with  a  heart  full  of  piety,  philan- 


72 


ECONOMIC  HISTORY. 


thropy,  and  public  spirit.  He  was  earnest  and  pure-minded, 
penetrated  by  a  sense  of  his  own  dignity  and  the  responsi¬ 
bilities  attached  to  it;  and  firmly  resolved  to  close  forever 
the  infamous  paths  in  which  his  predecessor  had  walked. 

But  unhappily,  his  capacity  bore  no  proportion  to  his  good¬ 
will.  He  was  incapable  of  forming  a  decision ;  his  education 
was  deficient ;  he  was  awkward  both  in  person  and  speech, 
and  slow  of  comprehension.  As  he  had  a  very  limited  knowl¬ 
edge  both  of  the  people  and  the  condition  of  his  empire, 
the  selection  of  his  ministers  was,  from  the  very  outset,  de¬ 
termined  by  accident,  the  influence  of  his  aunts,  his  queen, 
or  the  contending  court  factions ;  and  as  he  was  immovable 
wherever  morality  was  concerned,  but  utterly  helpless  in  the 
practical  execution  of  his  ideas,  his  was  just  a  case  in  which 
almost  everything  depended  on  the  aid  of  his  nearest  ad¬ 
visers.  He  possessed  just  sufficient  sense  of  justice  and 
benevolence  to  encourage  every  effort  for  useful  reforms,  but 
lacked  entirely  that  firmness  of  an  enlightened  judgment 
which  knows  how  to  bring  about  a  positive  result  in  spite  of 
the  opposition  of  existing  interests.  The  inevitable  conse¬ 
quences  soon  showed  themselves.  Anarchy,  which  under 
Louis  XV.  had  reigned  in  the  minds  of  men,  now  broke 
forth  into  overt  acts.  The  sufferings  of  the  people,  which 
individuals  had  hitherto  borne  in  silent  apathy,  now  occupied 
the  attention  of  the  masses. 

The  same  chance  which  in  his  reign  directed  the  manage¬ 
ment  of  public  business  had  given  him,  .as  his  first  minister, 
Turgot,  the  greatest  reformer  of  the  day. 

This  great  minister’s  strokes  fell  heavily  on  the  existing 
system  in  every  direction.  Among  his  measures  we  find  free 
trade  in  corn,  abolition  of  the  corvee  in  the  country  districts, 
liberation  of  trade  from  the  trammels  of  the  guilds,  the  erec¬ 
tion  of  the  caisse  d’escompte,1  a  number  of  improvements  and 
alleviations  in  the  mode  of  raising  the  public  taxes,  and  a 
prospect  held  out  to  all  possessors  of  property,  of  a  gradual 
increasing  share  in  political  rights;  and  it  is  under  these 

1  An  institution  for  lending  money  for  the  furtherance  of  manufactures  and 
commerce. 


CAUSES  OF  THE  FRENCH  REVOLUTION . 


73 


heads  that  the  restless  activity  of  this  liberal  statesman  may 
be  best  arranged.  We  may  easily  conceive  that  there  was 
scarcely  one  of  the  privileged  classes  which  did  not  consider 
its  previous  existence  imperilled. 

Opposition  rose  in  every  quarter ;  the  courtiers,  the  parlia¬ 
ments,  the  landed  aristocracy,  and  the  members  of  the  guilds 
all  threw  themselves  into  an  attitude  of  defence  with  noisy 
zeal.  The  contest  penetrated  into  the  royal  family  itself, — 
Louis’s  younger  brother,  Count  Charles  of  Artois,  abused 
the  minister,  who,  he  said,  was  undermining  the  aristocracy, 
the  prop  and  rampart  of  the  throne ;  and  a  cousin  of  the  king, 
the  rich  and  abandoned  Philip,  Duke  of  Orleans,  began, 
amid  the  general  excitement,  to  play  the  demagogue  on  his 
own  account.  Then  for  the  first  time  a  spectacle  was  seen 
in  Paris  which  was  subsequently  repeated  in  ever  darker 
colors,  —  the  spectacle  of  the  police  authorities  of  the  capital 
stirring  up  the  mob  against  the  crown,  and  on  this  occasion 
in  the  interest  of  the  privileged  classes. 

At  first  Louis  XVI.  declared  that  he  and  Turgot  were  the 
only  friends  of  the  people,  and  stood  firm  against  the  parlia* 
ment  of  Paris  and  the  street  rioters;  but  he  was  not  proof 
against  the  feebleness  of  his  own  character  and  the  wearing 
influence  of  those  by  whom  he  was  daily  surrounded.  After 
an  administration  of  nearly  a  year  and  a  half  Turgot  was 
obliged  to  yield  to  the  reaction  of  the  ancien  regime ,  and 
almost  all  his  creations  collapsed  at  once.  Then  followed  a 
long  period  of  experiments  and  palliatives ;  the  successors 
of  Turgot  would  gladly  have  gone  on  in  the  broad  track  of 
traditional  privileges  if  their  increasing  financial  difficul¬ 
ties  had  left  them  any  peace.  It  was  just  at  this  time  that 
Louis  resolved  to  support  the  North  Americans  against  Eng¬ 
land,  which  he  really  did  against  his  own  will  and  the  views 
of  his  ministers,  who  dreaded  the  expense  of  a  great  war,  and 
clearly  saw  that  the  emancipation  of  the  colonies  would  not 
weaken  England.  But  the  undefined  longing  for  freedom, 
and  the  liberal  political  doctrines  which  had  taken  root  far 
and  wide  in  the  land  prevailed  over  the  scruples  of  the 
king  and  his  counsellors.  The  Marquis  of  Lafayette,  then  a 


74 


ECONOMIC  HISTORY. 


tall,  light-haired  youth,  full  of  vanity  and  ambition,  who,  on 
account  of  his  ungraceful  manners,  had  no  success  at  court, 
fitted  out  a  ship  at  his  own  expense  and  sailed  across  the 
Atlantic.  A  number  of  influential  persons  cried  out  for 
vengeance  upon  England  for  the  humiliation  sustained  in  the 
Seven  Years’  War;  in  a  word,  the  warlike  party  carried 
their  point,  and  war  was  declared  against  England.  The 
consequence  to  France  was  a  rapid  spread  of  democratic 
sentiments  on  the  American  pattern.  The  followers  of 
Rousseau  were  triumphant ;  here,  they  said,  might  be  seen  the 
possibility  of  a  democracy  on  a  broad  basis,  —  the  construc¬ 
tion  of  a  State  on  the  foundation  of  the  natural  rights  of 
man.  Another  consequence  of  the  war  was  to  throw  fresh 
burdens  on  the  public  exchequer.  The  minister  of  finance 
at  this  time  was  Necker,  a  native  of  Geneva.  Having  come 
to  Paris  as  a  poor  clerk,  he  had  risen  by  his  talents  and  skill 
in  business  to  the  position  of  a  rich  banker,  and  with  great 
self-complacency  had  made  his  house  the  rendezvous  of  the 
more  distinguished  members  of  the  liberal  party.  By  his 
influence  with  the  bourse  he  procured  a  certain  degree  of 
credit  for  the  State,  and  raised  loan  after  loan  to  the  amount 
of  five  hundred  millions,  without  any  increase  of  the  taxes, 
or  any  provision  for  a  liquidation  of  the  debt  incurred. 
This  was  evidently  sacrificing  the  future  to  the  present,  since 
the  deficit  became  larger  every  year,  as  the  interest  of  the 
public  debt  increased.  Necker  had  the  real  merit  of  bring¬ 
ing  some  of  the  departments  of  finance  into  better  order;  he 
enjoyed  for  the  time  being  unbounded  popularity,  and  basked 
with  delight  in  the  universal  acknowledgment  that  he  was 
the  greatest  statesman  in  Europe.  Public  confidence  was 
freely  given  to  a  minister  who  endeavored  to  found  his  ad¬ 
ministration  on  credit  alone,  —  that  is,  on  the  confidence  of 
mankind.  He  was  looked  on  as  a  perfect  hero  when  he 
introduced,  with  good  results,  provincial  assemblies  into 
Berry  and  Guienne,  and  soon  afterwards,  breaking  through 
all  the  traditions  of  the  ancient  monarchy,  published  a  de¬ 
tailed,  but  unfortunately  very  inexact  and  highly  colored 
report  on  the  state  of  the  finances.  But  as  he  nowhere  laid 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


75 


the  axe  to  the  root  of  the  evil,  he  only  roused  a  number  of 
powerful  interests  by  his  attempts  at  innovation,  but  was 
utterly  unable  to  close  the  source  of  financial  confusion. 
He,  too,  soon  saw  no  other  means  of  recovery  but  limitation 
of  the  budget,  and  economy  in  the  expenses  of  the  court ;  by 
avowing  which  he  made  himself  hateful  to  all  the  grandees 
of  the  antechamber,  and  was  deprived  of  his  office  in  May, 
1781.  After  two  insignificant  and  inexperienced  ministers 
had  exhausted  their  strength  in  the  years  immediately 
following,  the  intendant  of  Lille,  the  gifted  but  frivolous 
Calonne,  was  called  to  the  helm.  He  began  with  the  propo¬ 
sition  that  whoever  wished  for  credit  must  cultivate  luxury ; 
and  he  renewed  the  prodigality  of  the  court  in  the  style  of 
Louis  XV.  After  matters  had  gone  on  in  this  jubilant 
course  for  some  years,  and  the  public  debt  had  been  increased 
by  four  hundred  millions,  and  the  taxation  by  twenty-one 
millions,  the  ruin  of  the  country  became  palpable  at  the  be¬ 
ginning  of  the  year  1787,  and  the  catastrophe  inevitable. 

Let  us  here  cast  a  glance  at  the  budget  of  the  ancien 
regime ,  the  disorder  of  which  was  to  give  the  signal  of  con¬ 
vulsion  to  every  quarter  of  the  civilized  world.  After 
Necker  and  Calonne,  the  Notables  and  the  Revolution,  have 
quarrelled  about  its  contents  with  equal  mendacity,  this 
budget  now  lies  in  its  most  secret  details  before  the  eyes  of 
the  historical  inquirer.1 

And  first,  with  regard  to  the  national  income,  which,  as 
is  well  known,  amounted  to  about  five  hundred  millions  be¬ 
fore  1789,  nearly  eight  hundred  under  Napoleon,  and  then 
increased  during  the  period  between  1815  and  1848  to  1,500 
million  francs.  However  definite  these  figures  may  appear, 
we  can  by  no  means  draw  a  conclusion  from  them  as  to  the 
cheapness  of  the  respective  modes  of  government  above- 
mentioned.  We  have  already  observed  that  in  proportion  to 
the  national  wealth  a  taxation  of  five  hundred  millions  be¬ 
fore  1789  would  be  about  equivalent  to  one  of  1,500  millions 
at  the  present  day.  In  the  next  place,  we  must  make  several 
additions  to  the  round  sum  of  five  hundred  millions. 

1  Bailly,  “  Hist,  financ.  de  la  France,”  ii.  278. 


76 


ECONOMIC  HISTORY. 


The  income  of  the  State  in  the  year  1785  was  calculated 
at  five  hundred  and  fifty-eight  millions,  to  which  were  added 
forty-one  millions  more  for  the  local  administration  of  the 
provinces,  a  sum  which  was  never  paid  into  the  treasury,  but 
immediately  expended  in  the  different  places  where  it  was 
raised.  Thus  we  find  that  the  nation  was  bearing  an  annual 
burden  of  from  five  hundred  and  ninety-nine  to  six  hundred 
millions.  At  the  same  time  the  Church,  whose  expenses  now 
figure  in  the  budget  of  the  State,  raised  one  hundred  and 
thirty-three  millions  in  tithes,  and  sixteen  millions  in  other 
dues  and  offerings.1  The  fees,  which  served  as  a  complement 
to  the  judicial  salaries,  amounted  to  twenty-nine  millions ; 2 
the  seigniors  raised  about  2,500,000  in  tolls  of  various  kinds, 
and  at  least  37,000,000  in  stamp  duties.3  I  pass  over  the 
feudal  rents  and  services,  the  valuation  of  which  is  quite 
impossible.  These,  from  their  very  nature,  cannot  be  taken 
into  account  in  speaking  of  the  public  burdens,  and  may  very 
well  be  set  off  against  the  mortgage  debts  of  the  modern 
peasant  proprietors. 

The  items  already  mentioned,  however,  in  addition  to 
some  of  a  similar  character,  amounted  to  two  hundred  and 
eighty  millions,  so  that  the  French  people  had  at  that  period 
to  bear  a  total  annual  taxation  of  eight  hundred  and  eighty 
millions.  If  we  compare  this  sum  with  the  national  wealth, 
we  may  unhesitatingly  set  it  down  as  equivalent  to  an 
amount  of  2,400  millions  at  the  present  day;  it  follows, 
therefore,  that  from  the  time  of  Louis  XV.  to  that  of  Napo¬ 
leon  III.  there  existed  but  one  government  in  France  which 
appropriated  to  itself  a  still  larger  proportion  to  the  public 
income  than  the  ancien  regime ,  and  that  one  was  the  govern¬ 
ment  of  the  Jacobins  during  the  Reign  of  Terror.  The 
Empire,  the  Restoration,  and  Louis  Philippe  contented  them- 


1  Louis  Blanc,  b.  iii.  c.  3,  estimates  them,  according  to  other  authorities, 
not  at  16,  but  at  30  millions. 

2  According  to  other  estimates,  42  millions.  Boiteau,  “Ltat  de  la  France  en 
1781.”  Paris,  1861. 

3  For  the  sake  of  brevity  I  use  this  term  to  denote  all  the  fees  paid  on  change 
of  property,  e.  g.,  lods,  relods,  quints,  etc. 


77 


CA  USES  OF  THE  F REN CH  REVOLUTION^ 

selves  with  far  smaller  sums ;  here,  too,  feudalism  finds  its 
counterpart  among  the  socialists. 

When  we  inquire  into  the  distribution  of  these  taxes 
among  the  different  classes  of  the  people,  we  discover  a  glar¬ 
ing  inequality.  The  higher  ranks  were  not  indeed  exempt 
from  taxation,  but  they  were  in  many  respects  favored.  Of 
the  taxes  on  consumption,  which  were  valued  at  three  hun¬ 
dred  and  eight  millions,  they  bore  of  course  a  full  share ;  but 
of  the  land  and  capitation  taxes  (one  hundred  and  seventy- 
one  millions)  they  ought,  as  was  discovered  during  the 
Revolution,  to  have  paid,  on  a  fair  distribution,  thirty-three 
millions  more  than  they  actually  did.  In  the  next  place 
the  maintenance  of  the  public  roads,  which  were  entirely 
kept  up  by  means  of  the  corvee ,  at  a  cost  of  twenty  millions, 
and  further,  the  expenses  of  the  provincial  militia,  about  six 
and  one  fourth  millions,  rested  entirely  on  the  shoulders  of 
the  lower  classes.  If  we  take  into  consideration  the  forty 
millions  quoted  above,  which  the  seigniors  received  from  the 
peasants,  the  fact  that  the  poorer  classes  of  every  town  were 
responsible  for  the  taxes  of  their  commune ,  even  when  their 
rich  fellow-citizens  escaped  payment  by  the  purchase  of 
privileged  offices,  and  lastly,  the  scandalous  unfairness  in 
the  imposition  of  the  taxes  on  consumption  to  which  the 
helpless  multitude  was  subjected  by  their  superiors,  we  shall 
easily  understand  the  triumphant  fury  with  which,  in  1789, 
the  peasants  more  especially  received  the  joyful  intelligence 
of  the  utter  destruction  of  the  system  above  described. 

Great  as  was  the  proportion  which  it  exacted  of  the  national 
income,  the  government  found  itself,  nevertheless,  in  a  state 
of  ever-increasing  need  and  embarrassment.  Disorder  on  the 
one  side  and  selfishness  on  the  other  scattered  its  treasures 
to  the  wind.  The  case  was  the  same  in  the  financial  admin¬ 
istration  as  in  that  of  justice ;  no  one  had  ever  tried  to  or¬ 
ganize  it  on  any  grand  principle  of  wise  adaptation  to  the 
end  in  view ;  on  the  contrary,  a  number  of  isolated  jurisdic¬ 
tions,  distinguished  from  one  another  according  to  provinces 
or  sources  of  income  or  the  destination  of  the  funds  in  ques¬ 
tion,  existed  side  by  side,  interfering  with  each  other’s 


78 


ECONOMIC  HISTORY. 


operations  and  destroying  all  responsibility.  The  amount  of 
arrears  due  the  treasury,  equal  perhaps  to  half  the  annual 
budget,  not  even  the  Revolution  has  been  able  to  ascertain, 
and  it  could  only  get  hold  of  the  profits  of  the  farmers  of  the 
revenue  by  means  of  the  guillotine.  When  once  familiarized 
with  deficits  the  government  soon  fell  into  the  stream  of 
floating  debts.  The  anticipation  of  the  revenue  of  future 
years,  at  a  usurious  discount  paid  to  the  collectors  them¬ 
selves,  the  putting  off  the  payment  of  debts  which  had  fallen 
due,  and  the  Omission  of  expenditure  prescribed  by  law, 
were  the  cause  of  equally  enormous  losses,  when  the  day  for 
liquidation  at  last  arrived.  How  widely  this  confusion 
spread  may  be  gathered  from  the  actual  cash  accounts  of  the 
year  1785.  By  the  side  of  the  regular  income  of  the  treas¬ 
ury,  of  not  quite  three  hundred  and  fifty-seven  millions, 
there  is  another  account  of  four  hundred  and  ninety-three 
millions  income  and  four  hundred  and  seven  millions  ex¬ 
penditure,  consisting  of  items  which  belong  either  to  the 
earlier  or  later  years  of  the  period  between  1781  and  1787; 
so  that  the  sum  total  amounts  to  nearly  eight  hundred  and 
fifty  millions.  We  see  what  a  field  was  opened  to  specula¬ 
tors  and  the  lovers  of  plunder,  and  to  what  a  state  such  pro¬ 
ceedings  had  reduced  the  prosperity  of  an  empire  which,  a 
hundred  years  earlier  and  twenty  years  later,  dictated  its 
will  to  Europe  as  a  law. 

The  last  feature  in  this  State  economy  which  reveals  to  us 
its  character  is  the  kind  of  expenditure  in  which  these  treas¬ 
ures  collected  with  so  much  difficulty  were  employed.  The 
expenses  of  the  court  were  stated  in  the  official  budget  at 
thirty-three  or  thirty-five  millions,  but  they  were  in  reality 
forty  millions,  which  did  not  include  the  royal  hunting  ex¬ 
peditions  and  journeys,  the  salaries  of  the  great  officers  of 
the  court,  or  the  maintenance  of  the  royal  palaces.  The  war 
office,  the  cost  of  which  Necker  states  at  ninety-nine  millions 
and  Calonne  at  one  hundred  and  fourteen  millions,  received 
one  hundred  and  thirty-one  millions,  of  which  rather  more 
than  thirty-nine  millions  went  to  the  administration,  forty- 
four  millions  for  the  pay  and  commissariat  of  the  troops, 
and  forty-six  millions  for  the  salaries  of  the  officers. 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


79 


Entirely  removed  from  all  ministerial  calculation  were  the 
money  orders  of  the  king  himself  “for  presents,  etc.,  to 
courtiers,  to  the  minister  of  finance  and  magistrates ;  repay¬ 
ment  of  foreign  loans ;  interest  and  discount  to  the  treasury 
officials ;  remission  of  certain  personal  taxes,  and  unforeseen 
expenses  of  every  kind.  ”  This  class  of  expenditure,  which  is 
well  characterized  by  the  above  heading,  amounted  in  1T85 
to  one  hundred  and  thirty-six  millions ;  in  other  years  the 
sum  was  rather  smaller ;  but  we  may  fairly  assume  that  the 
annual  average  was  more  than  one  hundred  millions.1  And 
while  we  thus  see  nothing  but  abundance  and  superfluity 
among  the  highest  classes  of  society,  the  bridges  and  roads 
are  only  set  down  at  four  millions ;  the  public  buildings  at 
scarcely  two  millions,  and  the  scientific  institutions  at 
rather  more  than  one  million ;  for  which  objects  the  budget 
of  1832  and  the  following  years  granted  fifty-nine  millions ! 
The  hospitals  and  foundling  institutions  received  six  millions 
from  the  State,  six  from  the  Church,  and  had  a  revenue  of 
twenty -four  millions  of  their  own ;  while  the  benevolent  in¬ 
stitutions  of  modern  France  (1832)  had  an  annual  sum  of  one 
hundred  and  nineteen  millions  at  their  disposal.  In  short, 
whatever  portion  of  the  financial  affairs  of  this  feudal  state 
we  investigate,  we  arrive  at  the  same  result,  and  find  the 
people  separated  into  two  great  classes,  one  of  which  was 
enriched  at  the  cost  of  the  other. 

But  as  every  such  draining  of  the  wealth  of  a  nation  bears 
within  itself  the  germs  of  ruin,  by  drying  up  on  the  one 
hand  the  sources  of  income,  and  increasing  on  the  other  the 
passion  for  extravagance,  the  government  found  itself  at  the 
end  of  1T86  in  the  following  condition:  the  regular  annual 
income  was  three  hundred  and  twenty-seven  millions;  the 
annual  expenditure  according  to  the  treasury  accounts 
amounted  to  three  hundred  and  forty  millions ;  in  addition 
to  this  there  were  twenty-seven  millions  for  pensions  and 
seventy -two  millions  of  urgent  arrears  from  former  years; 

1  We  arrive  at  this  result  from  the  debates  of  the  “Assemblee  Constitu- 
ante”  (in  April,  1790)  on  the  pensions,  the  ordonnances  a  comptant,  and  the  litre 
rouge.  Louis  Blanc  gives  a  number  of  details  from  these  in  b  iv.,  c.  6. 


80 


ECONOMIC  HISTORY. 


and  lastly,  in  the  year  1787  there  was  a  loss  of  twenty-one 
millions  from  the  cessation  of  a  tax  which  had  only  been 
imposed  for  a  period  ending  with  that  year.  The  deficit, 
therefore,  amounted  to  one  hundred  and  ninety-eight  mil¬ 
lions.  Up  to  this  time  the  government  had  helped  itself  by 
all  the  artifices,  both  bad  and  good,  of  a  credit  strained  to  the 
very  utmost  and  now  utterly  exhausted.  An  increase  of  the 
taxes  was  not  to  be  thought  of  on  account  of  the  enormous 
burdens  by  which  the  nation  was  already  crushed.  Under 
these  circumstances  Calonne,  with  genial  frivolity,  recurred 
to  the  serious  and  noble  plans  of  Turgot. 

He  had  hitherto  lived  on  the  favor  of  the  privileged 
classes;  he  now  endeavored  by  sacrificing  them  to  relieve 
the  commonwealth.  He  congratulated  the  State  on  having 
within  it  so  many  great  abuses,  by  the  removal  of  which  new 
sources  of  prosperity  might  be  opened. 

The  opposition  which  Turgot  had  met  with  was  of  course 
directed  with  redoubled  fury  against  Calonne.  A  closely 
crowded  throng  of  privileges  rose  tumultuously  against  his 
plans.  The  court  nobility,  the  provincial  estates,  the  tax- 
collectors,  the  courts  of  law,  the  police  officers,  the  council¬ 
lors  of  the  commune ,  and  the  heads  of  the  guilds,  took  up 
the  contest  against  the  will  of  the  king  and  his  ministers. 
But  the  development  of  modern  ideas  had  made  such  progress 
that  the  parties  competed  with  one  another  for  the  power  of 
public  opinion.  The  ministry  itself  emancipated  the  press 
in  order  to  expose  the  advocates  of  the  old  system  to  the  na¬ 
tional  contempt.  The  young  nobles  of  the  court  and  in  the 
provinces  armed  the  mob  of  Paris  and  the  peasants  of 
Auvergne  against  the  ministers,  and  instigated  them  to  vio¬ 
lent  excesses.  An  assembly  of  aristocratic  notables,  to 
whom  Calonne  submitted  his  schemes  of  reform,  refused 
their  assent,  claimed  the  right  of  inspecting  and  superin¬ 
tending  every  department  of  the  public  service,  and  ended  by 
declaring  that,  as  they  were  nominees  of  the  king  and  not 
representatives  of  the  nation,  they  were  not  competent  to 
make  new  grants.  Immediately  after  their  dismissal  the 
parliament  of  Paris,  which  next  to  the  ministry  was  the 


CAUSES  OF  THE  FRENCH  REVOLUTION. 


81 


highest  authority  in  the  State,  brought  forward,  as  a  positive 
demand,  what  the  notables  had  only  negatively  suggested. 
In  a  formal  decree  they  demanded  that  an  Assembly  of 
the  States -general  should  be  called, —  an  Assembly  which 
the  monarchy  had  dispensed  with  for  two  hundred  years. 
The  ministry  at  first  received  this  proposal  with  great  dis¬ 
favor  ;  but  as  the  want  of  money  grew  more  and  more  urgent, 
the  alluring  hope  arose  in  their  minds  of  finding  in  the 
States-general,  which  was  chiefly  composed  of  burghers,  a 
powerful  support  against  the  privileged  classes.  We  shall 
never  understand  the  extraordinary  success  of  the  first  revo¬ 
lutionary  movements,  unless  we  bear  in  mind  what  a  large 
share  in  the  government  of  the  country  was  possessed  by 
the  higher  orders  and  the  corporations,  and  how  they  now 
mutually  sought  each  other’s  destruction. 

Calonne  was  not  long  able  to  make  head  against  this  noisy 
opposition.  The  last  of  the  many  blows  which  caused  his 
fall  was  dealt  by  the  queen,  whom  he  afterwards  persecuted 
with  inextinguishable  hatred.  His  successor,  Brienne,  after 
a  violent  contest  with  the  parliaments,  resigned  his  office 
when  the  convocation  of  the  States-general  had  already  been 
determined  on,  and  the  national  bankruptcy  virtually  pro¬ 
claimed.  Louis  had  recourse  to  Necker  again,  who  really 
relieved  the  financial  embarrassment  for  the  moment,  and 
recognizing  the  necessity  of  a  liberal  policy,  fixed  the  meeting 
of  the  States-general  for  the  27th  of  April,  1789.  The  fer¬ 
ment,  which  owing  to  the  preceding  disputes  had  for  the  first 
time  since  the  religious  wars  penetrated  the  mass  of  the  peo¬ 
ple,  increased  from  hour  to  hour.  The  agitation  was  princi¬ 
pally  caused  by  the  question  whether  the  States-general  should 
meet  as  before  in  three  separate  chambers,  or  form  a  single 
assembly,  in  which  the  tiers  etat  should  have  a  double  number 
of  votes.  On  this  point  the  hitherto  allied  opposition  parties 
differed,  the  aristocrats  advocating  the  separation,  the  liberals 
the  union  of  the  three  estates.  Necker,  with  great  want  of 
tact,  betrayed  his  own  views  by  assigning  the  double  number 
of  votes  to  the  tiers  etat ,  while  he  induced  the  government  to 
observe  an  obstinate  silence  on  the  main  point  in  question. 

6 


82 


ECONOMIC  HISTORY. 


The  public  debates  on  this  subject  were  all  the  more  violent  in 
consequence  of  this  reticence,  and  in  Bretagne  it  came  to  an 
open  civil  war  between  the  nobility  and  the  burghers. 

The  radical  elements  in  France  saw  that  their  time  for  ac¬ 
tion  was  come,  and  the  great  dearness  of  provisions  which 
prevailed  during  the  winter  months  placed  a  large  number  of 
desperate  men  at  the  disposal  of  every  conspirator.  In  Paris 
the  revolutionary  demagogues  gathered  round  the  agents 
of  the  Duke  of  Orleans,  and  at  the  end  of  April  tried  their 
strength  in  a  sanguinary  street  riot,  which  was  professedly 
directed  against  the  usurious  avarice  of  a  rich  manufacturer, 
but  really  had  no  other  object  than  to  intimidate  the  mod¬ 
erate  party  before  the  impending  election  of  the  States- 
general.1  In  other  respects  external  quiet  still  prevailed 
in  the  provinces;  but  the  feverish  agitation  of  men’s  minds 
increased  with  every  day,  and  in  this  state  of  things  the 
elections  by  almost  universal  suffrage  began  to  be  held. 
Every  electoral  college  was  to  intrust  its  instructions  and 
complaints  to  its  deputies,  according  to  mediaeval  custom. 
In  every  district,  therefore,  a  long  list  of  abuses  was  drawn 
up  and  examined  and  brought  home  to  the  minds  of  the 
people  at  large  by  means  of  discussion.  A  modern  historian 
has  justly  observed  that  these  complaints  do  not  leave  a  sin¬ 
gle  particle  of  the  ancien  regime  untouched,  that  everything 
was  rejected  by  the  restless  desire  of  innovation,  and  that 
unfortunately  neither  the  possibility  nor  the  method  of  in¬ 
troducing  reforms  is  anywhere  pointed  out.  Revolution, 
universal  and  radical  revolution,  speaks  in  every  line  of 
these  documents.  There  was  but  one  thought  through  the 
whole  of  France,  that  thenceforward  a  new  era  was  to  com¬ 
mence  for  the  people  and  the  empire,  and  that  the  work  be¬ 
gun  must  be  completed  in  spite  of  every  opposition. 

While  the  millions  in  every  part  of  the  country  were  thus 
emancipating  themselves  from  the  bonds  of  traditional  law, 
uncertain  about  their  future,  but  firm  in  their  resolution  to 
proceed,  the  government  was  daily  sinking  more  and  more 

1  This  has  been  clearly  anil  concisely  shown  by  Croker  in  his  “  Essays  on 
the  French  Revolution,”  p.  60. 


CAUSES  OF  TEE  FRENCH  REVOLUTION. 


83 


into  utter  helplessness.  It  had  indeed  a  presentiment  of  the 
dangers  which  would  accompany  the  breaking  out  of  the 
new  epoch,  but  its  destitution  was  so  complete  that  it  eagerly 
longed  for  the  commencement  of  the  crisis.  Money,  one  of 
the  great  factors  of  material  power,  was  not  to  be  found  in 
its  coffers,  and  even  the  other,  the  army,  was  already 
affected  by  the  general  process  of  dissolution.  This  is  per¬ 
haps  the  most  important  circumstance  with  respect  to  the 
subsequent  course  of  the  French  Revolution,  and  its  difference 
from  all  those  which  have  since  taken  place  in  Europe.  The 
reason  is  simple  enough :  the  French  army  was  in  the  main 
organized  according  to  the  same  principles  as  the  other  de¬ 
partments  of  the  State,  and  like  them  had  been  thoroughly 
unhinged  by  the  contests  between  the  crown  and  the  feudal 
orders  long  before  the  breaking  out  of  the  Revolution.  The 
nobility  alone  were  eligible  for  commissions  in  the  army, 
and  though  single  exceptions  to  this  rule  really  occurred,  yet 
the  monopoly  was  actually  limited  by  a  law  of  1781  to  noble¬ 
men  of  four  descents.  Twenty-seven  regiments  belonged  to 
foreign  or  native  grandees,  and  in  these  the  owner  of  each 
regiment  appointed  the  colonel  from  a  list  drawn  up  by  the 
minister  at  war,  and  the  colonel  appointed  the  other  officers. 
The  influence  of  the  king’s  government,  therefore,  in  the 
selection  of  officers,  was  limited  to  the  composition  of  the 
list  of  candidates  for  the  single  office  of  colonel.  In  the  other 
divisions  of  the  army,  indeed,  the  highest  rank  was  in  the  gift 
of  the  king  alone,  but  of  the  other  commissions  only  one  half 
were  bestowed  by  the  king  and  the  other  half  by  the  colonel. 
The  officer  moreover  received  his  commission,  after  giving 
proofs  of  his  fitness,  on  payment  of  a  sum  of  money ;  it  was  a 
purchase  for  life,  as  in  the  case  of  thejcpu_rta_of  law  it  was  a 
purchase  of  an  hereditary  right.  The  duty  of  unconditional 
obedience  was  not  indeed  abrogated  by  this  system,  but  it 
was  inevitable,  especially  under  a  weak  government,  that  the 
corps  ©f  officers  should  feel  itself,  what  it  really  was,  a  part 
of  that  great  aristocracy  which  shared  with  the  king  the 
ruling  power  of  France  in  every  department  of  public  life. 
.The  contest  between  this  nobility  and  the  ministry,  by  which 


84 


ECONOMIC  HISTORY. 


the  last  years  „of  the  ancien  regime  were  filled,  must,  there¬ 
fore,  have  had  a  deep  effect  upon  the  army.  It  frequently 
occurred  that  the  officers,  like  the  judges,  with  their  colonels 
at  their  head,  refused  obedience.  And  as  in  the  rural  dis¬ 
tricts  the  opposition  of  the  aristocracy  was  followed  by  ex¬ 
citement  among  the  peasants,  and  the  opposition  of  the 
towns  by  excitement  among  the  artisans,  so  in  the  case  of 
the  army  the  popular  movement  found  its  way  into  the  minds 
of  the  soldiers,  and  operated  side  by  side  with  the  class  re¬ 
sistance  of  the  officers.  The  common  soldiers  had  felt  the 
oppression  of  the  ancien  regime  perhaps  more  deeply  than  the 
peasants  themselves,  for  they  were  starving  on  a  pay  of  ten 
sous,  while  countless  sums  were  employed  in  rich  endow¬ 
ments  for  1,171  generals.  They  suffered  all  the  insolence 
of  the  nobility  towards  the  canaille ,  embittered  by  the  weight 
of  a  severe  and  often  brutal  discipline,  and,  like  their  fellow- 
citizens,  they  looked  forward  to  the  meeting  of  the  States- 
general  as  the  signal  of  liberation  from  intolerable  slavery. 
The  number  of  regiments  on  which  the  government  could 
reckon  was  extremely  small.  The  bands  of  discipline  were' 
loosened  in  every  rank;  the  officers  inveighed  against  the 
despotism  of  the  ministers,  and  the  soldiers  promised  one 
another  to  do  nothing  against  the  people. 

The  ancient  polity,  therefore,  was  destroyed  by  its  own 
internal  discord  and  dissolution  before  a  single  revolutionary 
word  had  been  uttered.  The  government  was  destitute  of  money 
and  troops  to  defend  its  position,  and  the  feudal  seigniors, 
though  they  had  important  individual  rights,  had  no  general 
organization  which  could  enable  them  to  replace  the  govern¬ 
ment.  As  soon  as  public  opinion,  which,  guided  by  radical 
theories,  emphatically  rejected  both  the  government  and  the 
aristocracy,  obtained  an  organ  of  power  in  the  States-general 
it  only  needed  to  declare  its  will,  nay,  only  to  give  expres¬ 
sion  to  the  facts  before  them,  and  the  old  system  hopelessly 
collapsed  in  its  own  rottenness.  What  was  to  follow  no  man 
at  that  time  was  able  to  foresee.  As  most  men  were  ex¬ 
tremely  ill-informed  respecting  the  condition  of  the  country, 
they  indulged  in  hopes  which  were  all  the  more  ardent  in 


CAUSES  OF  THE  FRENCH  REVOLUTION . 


85 


proportion  as  they  were  undefined.  But  there  were  many 
who  knew  the  poverty  and  brutality  of  the  masses,  the  bitter 
hatred  between  rich  and  poor,  and  the  selfish  immorality  of 
the  upper  classes,  and  looked,  some  with  ambitious  pleas¬ 
ure,  others  with  patriotic  anxiety  towards  a  stormy  future. 


86 


ECONOMIC  HISTORY. 


IV. 

THE  EDICTS  OF  STEIN  AND  HARDENBERG. 

THE  EMANCIPATING  EDICT  OF  STEIN. 

From  Seeley’s  Life  and  Times  of  Stein,1  Vol.  I.  pp.  287-297. 

1807. 

T  CALL  by  this  name  the  great  edict  which  was  signed  on 
the  9th  of  October,  that  is,  only  five  days  after  Stein  had 
received  his  powers,  not  solely  because  it  contains  the  provi¬ 
sion  that  from  a  certain  date  there  shall  be  only  free  persons 
in  the  States  of  the  King  of  Prussia.  It  is  indeed  to  be  re¬ 
marked  that  the  principal  authors  of  the  measure  are  so 
intoxicated  with  the  pride  of  being  the  bestowers  of  freedom 
upon  bondsmen  that  they  forget  to  remark  how  much  more 
and  how  many  other  emancipations  they  accomplished  by 
the  same  act.  Stein’s  own  account  of  the  edict  of  October 
runs  as  follows:  — 

“The  measures  adopted  to  reach  the  above-mentioned  general 
object  were:  — 

“  (1)  Abolition  of  personal  serfdom  in  the  Prussian  Monarchy: 
by  an  Edict  of  October,  1807,  it  was  decreed  that  from  October 
8th,  1809  (sic;  it  should  be  1810),  personal  serfdom  with  its  con¬ 
sequences,  especially  the  very  oppressive  obligation  of  menial  ser¬ 
vice,  should  be  abolished;  but  the  obligations  of  the  peasant,  as 
far  as  they  flowed  from  his  possession  of  property,  remained  unal¬ 
tered.  It  was  reserved  for  the  Chancellor  Hardenberg’s  love  of 
innovation  (on  the  advice  of  a  H.  Scharrenweber,  a  dreamer  who 
died  in  a  madhouse  at  Eberbach  in  1820)  to  transform  in  1811  the 
relations  of  the  landlord  to  the  peasant  class,  and  its  inner  family 
relations  in  a  manner  pernicious  to  it;  in  this  I  had  no  share. 

“  (2)  The  transformation  of  the  peasants  on  the  Domain  in  East 
and  West  Prussia  into  free  proprietors.” 

1  University  Press,  Cambridge,  Eng.,  1870. 


EDICTS  OF  STEIN  AND  HARDENBERG. 


87 


Here  not  a  word  is  said  of  any  changes  made  by  the  Edict 
of  October  except  those  which  affected  the  peasant.  It  is 
the  same  aspect  of  the  edict  which  interests  Schon.  This 
edict,  he  says,  “has  made  the  figure  of  the  king  stand 
higher,  since  he  is  henceforth  no  longer  a  king  of  slaves,  but 
of  free  men.  ”  And  again :  — 

“Thus  came  into  existence  the  law  of  Oct.  9th,  1807,  that 
Habeas  Corpus  Act  of  our  State.  The  idea  of  freedom  had  begun 
to  live.  With  ninety-nine  hundredths  of  the  people  it  made  a 
deep  and  elevating  impression;  the  few  friends  of  slavery  intrigued 
and  murmured  no  doubt  a  good  deal,  so  that,  according  to  Bhedi- 
ger’s  story,  a  prejudiced  man  said  at  the  Berlin  Casino  after  read¬ 
ing  the  law,  ‘  Bather  three  battles  of  Auerstadt  than  such  a  law !  ’ 
But  the  king  stood  firm,  and  God  maintained  the  right.’ ’ 

In  stating  pretty  strongly  his  claims  to  be  considered  the 
real  author  of  the  law,  Schon  uses  language  which  shows  that 
he  is  thinking  almost  exclusively  of  this  part  of  it.  “All 
else  that  I  did  in  life,  ”  he  says,  “  was  as  nothing  compared 
to  calling  into  life  the  idea  of  freedom.”  Only  from  one 
casual  expression  do  we  learn  that  he  even  knew  that  the 
measure  had  another  side,  where  he  says,  “  I  represented  that 
hereditary  serfdom,  that  scourge  of  our  country,  must  be 
brought  to  an  end,  and  that  a  proclamation  of  free  trade  in 
landed  property  would  be  sufficient  to  promote  material 
interests.  ” 

Here  we  are  suddenly  introduced  to  something  quite  new, 
and  very  different  from  the  abolition  of  serfdom,  namely, 
free  trade  in  landed  property. 

Up  to  a  certain  point  it  is  true  that  these  two  things  coin¬ 
cide.  One  part  of  the  burden  of  serfdom  lay  in  the  incapac¬ 
ity  of  the  serf  to  alienate  his  land,  but  this  is  a  small  matter. 
The  proclamation  of  free  trade  in  land  affected  all  classes  of 
society  at  once,  and  the  upper  and  middle  classes  much  more 
than  the  peasantry.  When,  therefore,  we  observe  that  the 
edict  of  the  9th  of  October,  at  the  same  time  that  it  abolished 
personal  serfdom,  removed  all  the  principal  restrictions  that 
interfered  with  traffic  in  land,  we  see  that  it  is  in  fact  not  a 


88 


ECONOMIC  HISTORY. 


single  law,  but  two  laws  in  one,  and  two  laws  of  such  mag¬ 
nitude  that  each  by  itself  might  be  considered  equivalent  to 
a  social  revolution. 

But  when  we  look  closer  still  we  discover  that  the  edict 
goes  even"  further,  and  should  be  rather  described  as  three¬ 
fold  than  as  twofold.  Englishmen  are  only  too  familiar  with 
the  notion  of  a  depressed  class  of  agricultural  laborers ;  but 
such  depression  may  be  of  two  kinds,  and  may  spring  from 
two  very  different  causes.  We  are  not  to  suppose  that  the 
peasantry  of  Prussia  were  in  a  condition  resembling  that  of 
our  own  laborers  any  further  than  as  it  was  bad.  The  evils 
afflicting  the  Prussian  peasantry  were  those  arising  out  of 
status  ;  those  which  afflict  English  laborers  arise  mainly  out 
of  contract.  The  English  laborer  is  nominally  free  and  at 
liberty  to  carry  his  industry  to  the  best  market;  he  is  re¬ 
duced  to  real  dependence  by  his  inability  to  make  a  favorable 
bargain  for  himself.  The  Prussian  peasant  was  nominally 
a  serf,  but  in  reality  some  very  important  rights  were  se¬ 
cured  to  him.  We  are  not  to  suppose,  for  instance,  that  cruel 
punishments  were  allowed,  or  that  he  was  subject  to  the  ca¬ 
price  of  the  landlord.  He  was  far  more  of  a  proprietor  than 
the  English  laborer,  for,  though  on  a  degrading  tenure,  he 
did  for  practical  purposes  own  land.  Nor  were  his  interests 
neglected  as  those  of  a  freeman,  who  is  supposed  able  to  take 
care  of  himself,  may  be  neglected.  Not  only  was  he  a  mem¬ 
ber  of  an  ancient  and  organized  village  community,  but  the 
Government  also  took,  and  was  obliged  to  take,  the  greatest 
possible  interest  in  his  class;  for  these  serfs  were  neither 
more  nor  less  than  the  Prussian  army. 

Now  it  might  very  plausibly  be  maintained  that  the  pro¬ 
clamation  of  free  trade  in  land  would  not  create  a  happy 
peasant  class,  but  would  simply  substitute  for  a  peasantry 
laboring  under  certain  evils  that  class  of  famished  drudges 
whom  we  know  in  England,  and  who  if  they  cannot  be  called 
serfs  can  still  less  be  called  peasants,  for  a  peasant  properly 
so  called  must  have  a  personal  interest  in  the  land.  Hence 
the  conservative  opponents  of  Stein,  such  as  Marwitz,  actually 
declare  that  there  existed  no  slavery  or  serfdom  in  the  land- 


EDICTS  OF  STEIN  AND  HARDENBERG. 


89 


when  he  professed  to  abolish  it,  but  “  that  it  then  for  the 
first  time  began  to  appear,  namely,  the  serfdom  of  the  small 
holder  towards  the  creditor,  of  the  poor  and  sick  towards  the 
police  and  the  work-houses ;  ”  and  again,  “  that  with  the  pro¬ 
clamation  of  free  trade  disappeared  the  previous  security  of 
the  peasantry  in  their  holdings.  Every  rich  landowner  could 
now  buy  them  out  and  send  them  off ;  fortunately,  scarcely 
anybody  was  rich  any  longer !  ” 

These  were  the  criticisms  of  the  conservative  party,  which 
might  have  been  very  truly  applicable  to  a  simple  measure 
of  free  trade  in  land.  But  the  edict  of  October  had  in  fact 
taken  account  of  the  danger,  and  contained  an  express  pro¬ 
vision  to  meet  it.  Hence,  as  I  have  said,  it  was  actually  a 
threefold  enactment,  for  not  only  did  it  first  abolish  serfdom, 
and  secondly,  establish  free  trade  in  land,  but,  thirdly,  it 
endeavored  to  guard  the  peasantry  against  the  danger,  which 
in  so  many  countries  has  proved  serious,  of  being  gradually 
driven  out  or  turned  from  proprietors  into  wage-receivers  by 
the  effects  of  the  unequal  competition  to  which  they  are 
exposed. 

At  the  same  time  that  we  carefully  distinguish  these 
different  enactments  all  included  in  one*  legislative  edict, 
let  us  be  as  careful  to  remark  what  was  not  included  in  it. 
Englishmen  are  apt  to  attribute  to  the  legislation  of  Stein  all 
the  innovations  introduced  in  this  period.  In  particular  it 
has  been  supposed  that  he  created  the  peasant-proprietorship 
of  modern  Prussia,  But  this  he  did  not  do,  except,  as  he 
says  in  the  passage  quoted  above,  on  the  Domain  Lands  of 
West  and  East  Prussia.  Proprietors  in  a  certain  sense,  the 
peasantry  were  before  this  edict,  that  is,  they  cultivated 
land  for  themselves,  and  with  a  considerable  sense  of  secur¬ 
ity  ;  proprietors  in  the  full  sense  they  were  not,  because  they 
held  of  a  landlord  to  whom  they  owed  various  dues  and 
services.  Now  Stein’s  edict  altered  the  nature  of  these  ser¬ 
vices,  and  abolished  the  most  oppressive;  but  it  did  not 
destroy  the  rights  of  the  landlord  or  leave  the  peasant  sole 
master  of  the  land  he  cultivated.  It  was  reserved  for 
Hardenberg  to  do  this  by  an  edict  issued  on  Sept.  14,  1811, 


90 


ECONOMIC  HISTORY. 


and  it  should  be  noticed  that  Stein  expressly  declines  to  ac¬ 
cept  any  responsibility  for  this  innovation.  Again,  it  is  not 
to  be  supposed  that  the  provision  just  mentioned,  by  which 
Stein  tried  to  prevent  the  absorption  of  the  small  holdings  by 
the  great'  proprietors,  has  actually  proved  the  means  of  pre¬ 
serving  the  peasant  class  in  Prussia ;  for  all  this  passed  away 
with  the  legislation  of  Hardenberg,  and  it  has  been  by  its 
own  vitality,  and  not  by  State  interference,  that  peasant- 
proprietorship  has  maintained  itself. 

Further,  it  is  to  be  remarked  that  Stein  is  quite  accurate 
when  he  describes  his  Land  Reform  as  not  consisting  solely 
in  the  edict  of  October,  but  as  including  also  another  quite 
distinct  act  of  legislation,  which  applied  only  to  the  prov¬ 
inces  of  East  and  West  Prussia.  This  act  belongs  to  July, 
^-1808,  and  is  confined  not  simply  to  the  peasants  of  these  two 
provinces,  but  to  a  particular  class  of  peasants,  namely, 
those  sometimes  called  immediate  peasants,  or  in  other  words 
those  who,  living  on  the  Royal  Domains,  had  no  other  land¬ 
lord  but  the  king.  It  is  evident  that  the  Government  could 
deal  with  these  more  easily  than  with  those  peasants  whose 
condition  it  could  not  improve  without  meddling  with  the 
rights  of  another  class.  The  extreme  distress  in  which 
these  two  provinces  lay,  and  which  the  Government  was  in 
no  condition  to  relieve  directly,  was  the  justification  for 
granting  privileges  to  these  particular  immediate  peasants, 
which  for  the  moment  were  not  extended  to  those  of  the 
other  provinces. 

Such  then,  defined  in  general  terms,  was  the  extent  of 
this  reform.  It  needs,  however,  a  much  closer  description. 
In  the  first  place  the  reader  must  guard  against  a  misappre¬ 
hension  of  the  phrase  “free  trade  in  land  ”  into  which  he  is 
likely  to  be  led  by  his  English  experience.  Free  trade  in 
land  is  also  a  cry  of  our  own  reformers ;  but  we  must  beware 
of  supposing  that  what  they  call  for  is  the  same  thing  that 
was  granted  in  Prussia  by  Stein’s  edict.  The  complaint  in 
England  is  that  a  number  of  practical  obstructions  prevent 
land  from  being  the  object  of  such  free  purchase  and  sale  as 
other  commodities.  Much  of  the  land  of  the  country,  it  is 


EDICTS  OF  STEIN  AND  HARDENBERG. 


91 


said,  is  in  the  hands  of  persons  who  in  family  settlements 
have  given  up  the  right  to  alienate  it;  the  system  under 
which  landed  property  is  conveyed  is  so  cumbrous  and  ex¬ 
pensive  as  to  deter  people  from  transactions  of  the  kind; 
and  lastly  by  recognizing  the  principle  of  primogeniture  with 
respect  to  land  and  not  with  respect  to  personal  property  in 
cases  of  intestacy,  the  law  itself  countenances  the  notion  that 
landed  property  stands  in  a  class  by  itself,  and  is  not  to  be 
dealt  with  or  transferred  as  if  it  were  purely  a  commodity. 
Now  it  is  an  instance  of  the  confusing  and  misleading  in¬ 
accuracy  of  our  party  cries,  when  the  removal  of  these 
restrictions  is  called  free  trade  in  land.  Free  trade  in  other 
cases  means  the  removal  of  restrictions  imposed  by  the  law 
or  by  the  government ;  but  these  restrictions  are  of  quite  an¬ 
other  kind.  Only  the  last  mentioned  is  the  work  of  the  law, 
and  it  cannot  in  any  proper  sense  be  called  a  restriction,  for 
the  only  way  in  which  it  operates  restrictingly  is  by  lending 
the  moral  influence  of  the  law  to  the  support  of  a  restrictive 
system.  The  cumbrousness  of  our  conveyancing  is  merely 
the  result  of  the  gradual  way  in  which  our  land  system  has 
been  formed,  and  as  to  the  system  of  settlements,  so  far 
from  being  a  restriction  of  freedom,  it  is  the  direct  result  of 
freedom  of  contract, — so  much  so  that  the  reformers  them¬ 
selves  demand  an  interference  of  the  law  to  prevent  it ;  in 
other  words,  wish  to  promote  what  they  call  free  trade  by  a 
new  legal  prohibition. 

Now  when  Stein  is  said  to  have  established  free  trade  in 
land  the  expression  is  to  be  understood  literally.  The  hin¬ 
drances  to  the  sale  and  purchase  of  land  which  he  removed 
were  not  accidental  practical  obstacles,  but  formal  legal  pro¬ 
hibitions.  In  the  old  law  of  Prussia  and  in  the  Code  of 
Frederick  or  Allgemeines  Landrecht,  which  came  into  force 
in  1T94,  it  is  laid  down  that  noble  estates  (adelige  Giiter) 
can  only  be  held  by  nobles,  and  that  persons  of  civic  origin 
(biirgerlicher  Herkunft)  can  only  acquire  them  by  express 
permission  of  the  sovereign.  In  the  same  way  peasant-land 
could,  as  a  rule,  only  be  held  by  peasants,  and  land  belong¬ 
ing  to  towns  only  by  citizens.  We  are  familiar  with  the 


92 


ECONOMIC  HISTORY. 


idea  of  caste  as  applied  to  human  beings,  that  is,  of  an  unal¬ 
terable  status  stamped  upon  a  man  from  his  birth ;  in  Prussia 
it  may  be  said  that  caste  extended  actually  to  the  land,  so 
that  every  rood  of  soil  in  the  country  was  of  a  definite  and 
unalterable  rank,  and,  however  it  might  change  its  owners, 
always  remained  either  noble  or  citizen  or  peasant  land. 
Now  the  first  innovation  contained  in  Stein’s  edict  consisted 
in  cancelling  in  the  fewest  and  simplest  words  all  the  regu¬ 
lations  which  established  caste  in  land. 

When  the  edict  is  examined  more  closely  it  will  be  seen 
to  be  much  more  comprehensive  even  than  it  was  represented 
above  when  I  pointed  out  how  much  more  comprehensive  it 
was  than  was  commonly  supposed,  or  than  Stein  himself 
described  it.  For  at  the  same  time  that  it  abolishes  caste 
in  land  it  accomplishes  another  act  of  emancipation,  which 
is  in  no  way  expressed  in  the  phrase  free  trade  in  land ;  it 
removes  another  quite  distinct  set  of  restrictions  and  abol¬ 
ishes  caste  in  persons.  The  Code  of  Frederick  prohibited 
the  nobleman  from  engaging  in  any  occupation  properly 
belonging  to  the  citizen,  and  only  allowed  under  certain 
conditions  the  citizen  to  pass  into  the  class  of  peasants  or 
the  peasant  into  the  class  of  citizens.  The  Nobles,  the  Citi¬ 
zens,  the  Peasants  ;> these  were  the  three  castes  into  which 
the  Prussian  population  outside  the  professions  was  divided ; 
into  one  or  other  of  them  each  person  was  born,  and  in  the 
same,  as  a  rule,  he  died.  To  each  caste  was  assigned  its 
special  pursuit.  The  Noble  cultivated  his  estate  and  exer¬ 
cised  jurisdiction  over  the  peasantry  who  held  under  him, 
though  he  could  not  himself  hold  or  cultivate  peasant-land ; 
he  also  served  the  king  in  civil  or  military  office.  The 
Peasant  cultivated  his  plot  of  ground  rendering  fixed  services 
to  the  lord  and  subject  to  his  jurisdiction,  and  belonged  at 
the  same  time  to  the  rank  and  file  of  the  army.  Between 
them  stood  the  Citizen,  holding  a  monopoly  of  trades  and 
industries  which  by  law  were  confined,  with  few  exceptions, 
to  the  towns.  It  is  remarkable  that  the  military  profession 
was,  for  the  most  part,  closed  to  him.  This  must  be  borne 
in  mind  when  we  compare  the  Seven  Years’  War  with  the 


EDICTS  OF  STEIN  AND  HARDENBERG . 


93 


War  of  Liberation.  We  have  read  of  the  fearful  consump¬ 
tion  of  men  caused  by  the  Seven  Years’  War,  and  of  the 
desperate  shifts  of  Frederick  to  procure  recruits;  but  we 
must  understand  that  no  levee  en  masse  took  place  then,  and 
that  the  citizen  class  had  scarcely  any  share  in  what  was 
going  forward.  This  is  the  more  to  be  noted  because  the 
connection  between  the  citizen  class  and  the  learned  class 
was  closer  than  in  other  countries.  The  learning,  litera¬ 
ture,  and  philosophy,  which  flourished  so  remarkably  in  that 
age  took  the  tone  of  the  middle  class,  and  a  curious  result 
followed.  In  the  most  military  of  all  modern  States,  litera¬ 
ture,  because  it  sprang  from  a  class  which  enjoyed  an  ex¬ 
emption  from  military  service,  and  as  a  consequence,  the 
tone  of  public  feeling  which  is  determined  by  literature, 
was  in  an  especial  degree  wanting  in  the  military  spirit, — 
Scharnhorst  describes  the  army  as  being  generally  hated 
and  despised,  and  Kant  speaks  with  contempt  of  a  man  of 
education  who  had  embraced  a  military  life,  —  and  this  fact 
goes  some  way  to  explain  that  phenomenon  of  a  military 
State  fighting  exceptionally  ill  which  we  have  so  long  had 
before  us. 

This  state  of  society  is  very  foreign  to  our  ideas,  and  may 
perhaps,  because  we  have  no  experience  of  it,  fascinate  some 
imaginations.  No  laissez  faire  here ;  every  man’s  place  is 
assigned  to  him  from  his  birth;  his  occupations  are  pre¬ 
scribed,  and  a  great  taskmaster  or  earthly  Providence  stands 
at  the  head  of  the  whole  society,  which  may  be  called  army 
or  nation  at  pleasure,  since  even  the  unmilitary  citizens  were 
regarded  by  the  State  principally  as  a  sort  of  commissariat 
department.  And  for  the  immediate  purpose  of  Frederick 
William  I.  and  Frederick  the  Great  the  system  was  well 
adapted,  for  that  purpose  was  simply  military.  A  place  for 
every  man,  and  every  man  in  his  place;  the  “productive 
forces  of  the  country  perfectly  inventoried  and  a  debtor  and 
creditor  account  of  its  resources  kept;”1  by  such  a  system 
the  rulers  could  wield  the  whole  force  of  the  country  most 
easily  and  certainly.  Nevertheless,  the  destruction  of  this 

1  Morier. 


94 


ECONOMIC  HISTORY. 


whole  system  by  a  stroke  of  Stein’s  pen  was  now  regarded  as 
the  greatest  of  reforms  and  the  commencement  of  the  resto^ 
ration  of  Prussia.  For  it  will  be  evident  that  the  same  sys¬ 
tem  which  concentrated  so  powerfully  and  measured  so  ex¬ 
actly  the  forces  of  the  country  at  the  same  time  entirely 
prevented  them  from  growing,  not  to  mention  the  intellect¬ 
ual  stagnation,  outside  the  university  world,  which  was  pro¬ 
duced  by  such  rigid  uniformity  of  life.  A  country  in  which 
no  man  can  follow  his  natural  bent,  take  to  agriculture  if  he 
does  not  like  trade,  or  to  trade  if  he  does  not  succeed  in  agri¬ 
culture,  is  evidently  not  an  industrial  country.  Its  material 
resources  under  such  a  system  will  remain  undeveloped,  and 
if  it  be  a  poor  country,  as  Prussia  was,  the  system  will  actu¬ 
ally  in  the  end  defeat  its  own  object,  for  such  a  country  from 
mere  poverty  will  be  weak  in  war. 

As  the  first  section  of  the  edict  abolished  what  I  have 
called  “caste  in  land,”  so  the  second,  consisting  of  about 
three  lines,  abolished  caste  in  persons.  And  here  it  may 
perhaps  be  observed  that  I  omitted  above  one  principal  cir¬ 
cumstance  which  made  such  sweeping  changes  so  easy  to 
Stein.  Before  the  Peace  of  Tilsit  it  would  have  been  scarcely 
possible  to  carry  out  such  reforms,  however  much  the  rulers 
might  have  been  convinced  of  their  necessity.  Frederick 
had  shrunk  from  the  emancipation  of  the  serfs  because  he 
felt  that  it  would  introduce  disorder  into  his  army,  and  for 
the  same  reason  these  reforms  also  would  have  been  scarcely 
practicable  so  long  as  the  army  existed.  The  disasters 
brought  with  them  the  compensation  that  they  destroyed  for 
a  moment  this  incubus.  The  necessity  of  maintaining  a 
great  position  in  Europe,  the  necessity  even  of  defending  the 
country,  ceased  when  the  country  actually  fell  into  French 
occupation ;  and  thus,  as  we  may  say,  the  building  being  down 
it  was  for  the  first  time  possible  to  mend  a  defect  in  the 
foundations. 

These  reforms,  favored  as  they  were  by  circumstances  and 
requiring  but  few  lines  in  the  edict,  were  yet  much  more 
fundamental  and  pregnant  with  consequences  than  any  such 
practical  reforms  as  may  be  called  for  in  England  to  make 


EDICTS  OF  STEIN  AND  HARDENBERG. 


95 


the  purchase  of  land  more  easy.  They  were  a  sort  of  Magna 
Charta  to  the  Prussians,  and  Schon  might  well  have  applied 
to  them  the  enthusiastic  expressions  which  he  keeps  for  the 
sections  which  emancipated  the  serf.  In  v.  Ronne’s  stand¬ 
ard  text-book  of  Prussian  Constitutional  Law  I  find  in  the 
chapter  on  Rights,  under  the  first  title,  Freedom  or  Security 
of  the  Person,  that  this  freedom  is  composed  of  three  rights : 
a)  the  right  of  movement  and  free  choice  of  abode  (Freizii- 
gigkeit);  (2)  the  right  of  emigration  (Auswanderungsrecht) ; 
(8)  the  right  of  choosing  a  calling  or  trade  (Freie  Wahl  von 
Beruf  und  Gewerbe) ;  and  this  third  right,  we  are  informed, 
was  given  to  the  Prussians  by  the  edict  of  October,  1807. 
The  same  is  said  of  the  first  of  the  rights  which  go  to  make 
up  the  second  title;  namely,  free  right  to  the  acquisition 
and  possession  of  property  (Freies  Recht  zum  Erwerbe  und 
Besitze  des  Eighenthums). 

I  proceed  to  give  the  text  of  this  edict,  the  vast  impor¬ 
tance  of  which  will  have  by  this  time  become  clear.  The 
less  important  sections  are  printed  in  a  smaller  type,  and  of 
§§  III.  and  V.,  as  purely  technical,  only  the  heading  is 
given. 

Edict  concerning  the  facilitation  of  possession  and  the  free  use  of 
landed  property ,  as  well  as  the  personal  relations  of  the  inhabi¬ 
tants  of  the  country. 

We,  Frederick  William,  by  the  grace  of  God  King  of  Prussia,  &c.,  &c., 
Make  known  hereby  and  give  to  understand.  Since  the  beginning  of  the 
peace  We  have  been  before  all  things  occupied  with  the  care  for  the  de¬ 
pressed  condition  of  Our  faithful  subjects,  and  the  speediest  restoration 
and  greatest  improvement  of  it.  We  have  herein  considertd  that  in  the 
universal  need  it  passes  the  means  at  Our  command  to  furnish  help  to  each 
individual,  and  yet  We  could  not  attain  the  object;  and  it  accords  equally 
,  with  the  imperative  demands  of  justice  and  with  the  principles  of  a  proper 
national  economy,  to  remove  all  the  hindrances  which  hitherto  prevented 
the  individual  from  attaining  the  prosperity  which,  according  to  the 
measure  of  his  powers,  he  was  capable  of  reaching;  further,  We  have 
considered  that  the  existing  restrictions,  partly  on  the  possession  and  en¬ 
joyment  of  landed  property,  partly  on  the  personal  condition  of  the  agri¬ 
cultural  laborer,  specially  thwart  Our  benevolent  purpose  and  disable  a 
great  force  which  might  be  applied  to  the  restoration  of  cultivation,  the 


96 


ECONOMIC  HISTORY. 


former  by  their  prejudicial  influence  on  the  value  of  landed  property  and 
the  credit  of  the  proprietor,  the  latter  by  diminishing  the  value  of  labor. 
We  purpose,  therefore,  to  reduce  both  within  the  limits  required  by  the 
common  well-being,  and  accordingly  ordain  as  follows :  — 

§  I.  Freedom  of  Exchange  in  Land. 

Every  inhabitant  of  our  States  is  competent,  without  any  limita¬ 
tion  on  the  part  of  the  State,  to  possess  either  as  property  or  pledge 
landed  estates  of  every  kind :  the  nobleman  therefore  to  possess  not 
only  noble  but  also  non-noble,  citizen,  and  peasant  lands  of  every 
kind,  and  the  citizen  and  peasant  to  possess  not  only  citizen,  peas¬ 
ant,  and  other  non-noble,  but  also  noble,  pieces  of  land,  without 
either  the  one  or  the  other  needing  any  special  permission  for  any 
acquisition  of  land  whatever,  although,  henceforward  as  before, 
each  change  of  possession  must  be  announced  to  the  authorities. 

§  II.  Free  Choice  of  Occupation. 

Every  noble  is  henceforth  permitted  without  any  derogation  from 
his  position,  to  exercise  citizen  occupations;  and  every  citizen  or 
peasant  is  allowed  to  pass  from  the  peasant  into  the  citizen  class, 
or  from  the  citizen  into  the  peasant  class. 

§  III.  How  far  a  legal  right  of  Pre-emption  and  a  First  Claim  still 
exist. 

§  IV.  Division  of  Lands. 

Owners  of  Estates  and  Lands  of  all  kinds,  in  themselves  alienable  either 
in  Town  or  Country,  are  allowed,  after  due  notice  given  to  the  provincial 
authority,  with  reservation  of  the  rights  of  Direct  Creditors  and  of  those 
who  have  the  right  of  pre-emption  (§  III.),  to  separate  the  principal  estate 
and  its  parts,  and  in  general  to  alienate  piecemeal.  In  the  same  way  Co¬ 
proprietors  may  divide  among  them  property  owned  in  common. 

§  V.  Granting  of  Estates  under  Leases  for  a  Long  Term. 

§  VI.  Extinction  and  Consolidation  of  Peasant  Holdings. 

When  a  landed  proprietor  believes  himself  unable  to  restore  or 
keep  up  the  several  peasant  holdings  existing  on  an  estate  which 
are  not  held  by  a  hereditary  tenure,  whether  of  a  long  lease  or  of 
copyhold,  he  is  required  to  give  information  to  the  government  of 
the  province,  with  the  sanction  of  which  the  consolidation,  either 
of  several  holdings  into  a  single  peasant  estate,  or  with  demesne 
land,  may  be  allowed  as  soon  as  hereditary  serfdom  shall  have 
ceased  to  exist  on  the  estate.  The  provincial  Authorities  will  be 
provided  with  a  special  instruction  to  meet  these  cases. 

§  VII.  If,  on  the  other  hand,  the  peasant  tenures  are  hered¬ 
itary,  whether  of  long  lease  or  of  copyhold,  the  consolidation  or 


EDICTS  OF  STEIN  AND  HARDENBERG. 


97 


other  alteration  of  the  condition  of  the  lands  in  question,  is  not 
admissible  until  the  right  of  the  actual  possessor  is  extinguished*, 
whether  by  the  purchase  of  it  by  the  lord  or  in  some  other  legal, 
way.  In  this  case  the  regulations  of  §  VI.  also  apply. 

§  VIII.  Indebtedness  of  Feudal  and  Entailed  Estates  in  consequence: 
of  the  Ravages  of  War. 

Every  possessor  of  feudal  or  entailed  property  is  empowered  to  raise  the 
sums  required  to  replace  the  losses  caused  by  war,  by  mortgaging  the  sub¬ 
stance  of  the  Estates  themselves,  as  well  as  the  revenues  of  them,  provided 
the  application  of  the  money  is  attested  by  the  Administrator  (Landrath) 
of  the  Circle  or  the  Direction  of  the  Department.  At  the  end  of  three 
years  from  the  contracting  of  the  debt  the  possessor  and  his  successor  are 
bound  to  pay  off  at  least  the  fifteenth  part  of  the  capital  itself. 

§  IX.  Extinction  of  Feudal  Relations,  Family  Settlements,  and  En¬ 
tails,  by  Family  Resolution. 

Every  feudal  connection  not  subject  to  a  Chief  Proprietor,  every  family 
settlement  and  entail  may  be  altered  at  pleasure  or  entirely  abolished  by  a 
Family  Resolution,  as  is  already  enacted  with  reference  to  the  East  Prus¬ 
sian  Fiefs  (except  those  of  Ermeland)  in  the  East  Prussian  Provincial  Law, 
Appendix  36. 

§  X.  Abolition  of  Villainage. 

From  the  date  of  this  Ordinance  no  new  relation  of  villainage, 
whether  by  birth,  or  marriage,  or  acquisition  of  a  holding,  or  by 
contract,  can  come  into  existence. 

§  XI.  With  the  publication  of  the  present  Ordinance  the  exist¬ 
ing  condition  of  villainage  of  those  villains  with  their  wives  and 
children  who  possess  their  peasant -holdings  by  hereditary  tenures 
of  whatever  hind  ceases  entirely  both  with  its  rights  and  duties. 

§  XII.  From  Martinmas,  1810,  ceases  all  villainage  in  Our 
entire  States.  From  Martinmas,  1810,  there  shall  be  only  free  per¬ 
sons,  as  this  is  already  the  case  upon  the  Domains  in  all  Our  prov¬ 
inces;  free  persons,  however,  still  subject,  as  a  matter  of  course,  to 
all  the  obligations  which  bind  them  as  free  persons  by  virtue  of 
the  possession  of  an  estate  or  by  virtue  of  a  special  contract. 

To  this  declaration  of  Our  royal  Will  every  man  whom  it  may  concern, 
and  in  particular  Our  provincial  and  other  governments,  are  exactly  and 
loyally  to  conform  themselves,  and  the  present  Ordinance  is  to  be  made 
universally  known. 

Authentically,  under  Our  royal  Signature.  Given  at  Memel,  Oct.  9th, 
1807. 

Friedrich  Wilhelm, 
Schrotter,  Stein,  Sckrbtter  II. 
-7 


98 


ECONOMIC  HISTORY. 


The  elder  Schrotter  was  at  this  time  minister  for  the  prov¬ 
ince  of  Prussia,  and  he  with  his  brother  was  entrusted  with 
the  task  of  publishing  the  Ordinance  in  the  province  where 
it  had  received  the  king’s  signature.  It  is  for  this  reason 
that  their  names  are  affixed  to  it  along  with  Stein’s. 

That  threefold  character  of  the  edict  which  was  pointed 
out  above  will  appear  very  visibly  by  observing  the  three 
groups  of  sections,  which  on  account  of  their  especial  impor¬ 
tance  have  been  printed  in  large  type.  The  abolition  of  caste 
both  in  land  and  in  persons  is  accomplished  in  the  first  two 
sections ;  the  abolition  of  villainage  in  the  last  three,  which 
it  is  evident  might  as  well  have  composed  a  separate  edict. 
Sections  six  and  seven  are  introduced  to  prevent  the  system 
of  free  trade  in  land  from  bearing  too  hard  on  the  peasant 
and  making  the  proprietorship  of  land  a  monopoly  of  the 
richer  classes.  .  .  . 


THE  AGRARIAN  LEGISLATION  OF  HARDENBERG. 

From  Morier’s  “The  Agrarian  Legislation  of  Prussia  during 
the  present  Century,”  in  “Systems  of  Land  Tenure  in  vari¬ 
ous  Countries.”1  pp.  306-316. 

1811. 

The  edict  of  1807,  great  and  incisive  as  had  been  its 
operation,  was  of  a  negative  kind.  It  removed  disabili¬ 
ties,  undid  the  shackles  which  bound  the  peasant  to  the 
glebe,  allowed  such  rights  as  existed  to  be  used  freely,  and 
pulled  down  the  walls  which  separated  from  each  other  the 
different  classes  of  society.  But  it  created  no  new  forms  of 
property ;  it  proclaimed  freedom  of  exchange,  but  it  did  not 
provide  the  title-deeds  required  as  the  first  condition  of  ex¬ 
change.  Peasants’  land  could  now  be  held  indiscriminately 
by  all  the  citizens  of  the  State;  but  it  was  still  held  under 
the  old  forms  of  tenure;  there  were  still  two  “dominia. ” 
The  lord  was  still  owner  of  the  peasants’  land,  but  had  no 


1  London :  Macmillan  &  Co.,  1870. 


EDICTS  OF  STEIN  AND  HARDENBERG. 


99 


right  to  its  possession.  The  peasant  was  free  but  was  not 
master  of  his  labor. 

The  legislation  of  1811  stepped  in  to  remedy  this  state  of  - 
things,  and  applying  to  the  monarchy  generally  the  princi¬ 
ples  which  during  the  last  three  years  had  proved  in  the 
highest  degree  successful  when  applied  to  the  State  domains, 
it  set  itself  to  substitute  allodial  ownership  for  feudal  ten-  k 
ure.  Its  work  was  in  the  highest  degree  positive. 

The  legislation  of  1811  mainly  consists  of  two  great 
edicts,  both  bearing  the  same  date,  that  of  the  14th  of  Sep¬ 
tember, —  the  one  entitled  “Edict  for  the  Regulation  of  the 
Relations  between  the  Lords  of  the  Manor  and  their  Peas¬ 
ants  ;  ”  the  other,  “  Edict  for  the  better  Cultivation  of  the 
Land.  ” 

The  first  is  concerned  with  the  creation  of  new  title-deeds 
for  the  peasant  holders,  and  with  the  commutation  of  the 
services  rendered  in  virtue  of  the  old  title-deeds. 

The  second  surveys  the  whole  field  of  agrarian  reform,  and 
introduces  general  measures  of  amelioration. 

The  preamble  to  the  “  Edict  for  the  Regulation  of  the  Re¬ 
lations  between  Landlord  and  Tenant”  recites  how  “We, 
Frederick  William,  by  the  grace  of  God,  King  of  Prussia,  hav¬ 
ing  convinced  ourselves,  both  by  personal  experience  in  our 
own  domains,  and  by  that  of  many  lords  of  manors,  of  the 
great  advantages  which  have  accrued  both  to  the  lord  and  to 
the  peasant  by  the  transformation  of  peasant  holdings  into 
property,  and  the  commutation  of  the  services  and  dues  on 
the  basis  of  a  fair  indemnity,  and  having  consulted,  in  re¬ 
gard  to  this  weighty  matter,  experienced  farmers,  and  skilled 
persons  of  all  kinds  belonging  to  all  our  provinces,  and  to 
all  ranks  of  our  subjects,  ordain  and  decree  as  follows :  ” 

The  edict  then  branches  off  into  two  main  parts,  —  the 
first  dealing  with  peasant  holdings  in  which  the  tenant  has 
hereditary  rights;  the  second  with  holdings  in  which  the 
tenant  has  no  hereditary  rights. 


100 


ECONOMIC  HISTORY. 


PART  I. 

All  tenants  of  hereditary  holdings,  that  is,  holdings  which 
are  inherited  according  to  the  common  law,  or  in  which  the 
lord  of  the  manor  is  bound  to  select  as  tenant  one  or  other 
of  the  heirs  of  the  last  tenant,  whatever  the  size  of  the  holding , 
shall  by  the  present  edict  become  the  proprietors  of  their 
holdings,  after  paying  to  the  landlord  the  indemnity  fixed 
by  this  edict.  On  the  other  hand,  all  claims  of  the  peasant 
on  the  manor,  for  the  keeping  in  repair  of  his  farm-buildings, 
etc.,  shall  cease. 

We  desire  that  landlords  and  tenants  should  of  themselves 
come  to  terms  of  agreement,  and  give  them  two  years  from 
the  date  of  the  edict  to  do  so.  If  within  that  time  the  work 
is  not  done,  the  State  will  undertake  it. 

The  rights  to  be  commuted  may  be  thus  generally  classed :  — 

I.  Rights  of  the  landlord. 

1.  Right  of  ownership  (“  dominium  directum  ”). 

2.  Claim  to  serviQes. 

3.  Dues  in  money  and  kind. 

4.  Dead  stock  of  the  farms. 

5.  Easements  or  servitudes  on  the  land  held. 

II.  Rights  of  the  tenant.1 

1.  Claim  to  assistance  in  case  of  misfortune. 

2.  Right  to  gather  wood  and  other  forest  rights  in  the 

forest  of  the  manor. 

3.  Claim  upon  the  landlord  for  repairs  of  buildings. 

4.  Claim  upon  the  landlord  in  case  tenant  is  unable  to 

pay  public  taxes. 

5.  Pasturage  rights  on  demesne  lands  or  forests. 

Of  these  different  rights  only  a  few,  namely,  the  dues  paid 
in  kind  or  money,  the  dead  stock  and  the  servitudes,  are  capa- 

1  It  is  worthy  of  remark  that  the  tenant’s  “  dominium  utile,”  or  right  of  pos¬ 
session,  is  not  recorded  as  a  set-off  against  the  dominium  directum  of  the  lord 
of  the  manor.  The  fact  is,  this  right  of  possession  is  something  so  self-under¬ 
stood,  that  it  never  seems  present  to  the  mind  of  the  legislator.  The  “  domin¬ 
ium  directum  ”  is  something  quite  different,  for  it  represents  an  aggregation  of 
all  kinds  of  different  rights.  These  rights  he  has  to  sell  to  the  peasant,  and 
the  peasant  buys  them  with  the  only  thing  he  possesses,  viz.,  the  land. 


EDICTS  OF  STEIN  AND  HA11DENBERG . 


101 


ble  of  exact  valuation.  The  others  can  only  be  approxi¬ 
mately  estimated. 

To  obtain,  therefore,  a  solid  foundation  for  the  work  of 
commutation,  and  not  to  render  it  nugatory  by  difficulties  im¬ 
possible  to  be  overcome,  we  deem  it  necessary  to  lay  down 
certain  rules  for  arriving  at  this  estimate,  and  to  deduce 
those  rules  from  the  general  principles  laid  down  by  the  laws 
of  the  State.  These  principles  are :  — 

1.  That  in  the  case  of  hereditary  holdings,  neither  the 

services  nor  the  dues  can,  under  any  circumstances, 

be  raised. 

2.  That  they  must,  on  the  contrary,  be  lowered  if  the  holder 

cannot  subsist  at  their  actual  rate. 

3.  That  the  holding  must  be  maintained  in  a  condition 

which  will  enable  it  to  pay  its  dues  to  the  State. 

From  these  three  constitutional  principles,  as  well  as 
from  the  general  principligof  public  law,  it  follows  that  the 
right  of  the  State,  both  tlWrdinary  and  extraordinary  taxes, 
takes  precedence  of  #very  other  right,  and  that  the  services 
to  the  manor  are  limited  by  the  obligation  which  the  latter 
is  under  to  leave  the  tenant  sufficient  means  and  to  pay 
taxes. 

We  consider  that  both  these  conditions  are  fulfilled  when 
the  sum-total  of  the  dues  and  services  rendered  to  the 
manor  do  not  exceed  one-third  of  the  total  revenue  de¬ 
rived  by  an  hereditary  tenant  from  his  holding.  Therefore, 
with  the  exceptions  to  be  hereafter  described,  the  rule  shall 
obtain : 

That  in  the  case  of  hereditary  holdings  the  lords  of  the 
manor  shall  be  indemnified  for  their  rights  of  ownership  in 
the  holding,  and  for  the  ordinary  services  and  dues  attached 
to  the  holding,  when  the  tenants  shall  have  surrendered  one 
third  portion  of  all  the  lands  held  by  them,  and  shall  have 
renounced  their  claims  to  all  extraordinary  assistance,  as 
well  as  to  the  dead  stock,  to  repairs,  and  to  the  payment  on 
their  behalf  of  the  dues  to  the  State  when  indSpable  of 
doing  so. 


102 


ECONOMIC  HISTORY. 


The  edict  then  goes  on  to  lay  down  the  rules  to  be  ob¬ 
served  in  applying  this  principle. 

These  rules  presuppose  the  existence  of  the  agricultural 
community  referred  to  in  the  earlier  part  of  this  paper, 
namely,  equal  allotments  in  an  arable  mark;  the  division 
of  the  arable  mark  in  which  these  several  allotments  are 
situated  into  three  u Commonable  Fields ,  ”  or  “Fluren;”  a 
common  system  of  cultivation  obligatory  on  the  community, 
in  order  to  secure  the  community’s  right  of  pasture  on 
the  fallow  and  stubbles;  and  common  rights  of  property  in 
common  lands  occupied  “de  indiviso,”  mostly  pasture  lands, 
woods,  etc.,  but  sometimes  also  in  arable  common  lands. 
As  the  rule,  the  lord  of  the  manor  is  to  acquire  possession 
of  one  of  the  three  Fields,  or  of  one  third  portion  of  each 
field,  and  of  one  third  portion  of  the  common  lands. 

We  have  no  space  to  enter  into  the  details  of  the  ar¬ 
rangements  which  provide  for  the  cases  differing  from 
these. 

As  noted  above,  the  lords  and  the  peasants  are  left  free  to 
make  what  arrangements  they  please,  as  long  as  the  propor¬ 
tion  of  one  third  is  maintained ;  that  is,  the  indemnity  may 
take  the  form  of  a  payment  of  capital,  or  of  a  corn  or  money 
rent.  Yet  the  rule  to  be  followed  (and  a  departure  from  this 
rule  must  have  a  distinct  motive)  is  that  the  indemnity  must 
be  paid  in  land  where  the  holdings  are  over  fifty  “morgen,”  1 
but  in  the  shape  of  a  corn-rent  where  the  holdings  are  under 
that  size. 

As  a  matter  of  practical  convenience  to  both  parties,  the 
absolute  separation  of  proprietary  rights  suffers  some  few 
exceptions ;  the  first  and  most  important  is  that  the  lord 
retains  the  right  of  pasturing  the  manorial  sheep  on  two 
thirds  of  the  fallow  and  stubbles  of  the  arable  mark;2  the 
peasant  also  continues  to  enjoy  the  right  of  collecting  as 
much  firewood  in  the  demesne  as  he  requires  for  his  per- 

1  The  Prussian  acre  is  about  equal  to  two  thirds  of  an  English  acre,  an 
hundred  English  acres  being  equal  to  158|  Prussian  acres. 

2  Compare  Rogers’  “  History  of  Agriculture  and  Prices  in  England,”  vol.  i. 
p.  31. 


EDICTS  OF  STEIN  AND  IIARDENBERG. 


103 


sonal  use.  For  this  right  and  for  the  acquisition  of  his  house 
and  farm-buildings  as  well  as  his  garden-plot  (his  allot¬ 
ment  in  the  mark  of  the  township)  he  continues  to  render 
services  to  the  lord  of  the  manor  at  times  (for  example,  har¬ 
vest)  when  extra  hands  are  wanted.  These  services  are 
however  restricted  to  a  maximum  of  ten  days  of  team¬ 
work,  and  ten  days  of  hand-labor  for  a  team-peasant,  and 
ten  days’  man’s-work  and  ten  days’  woman’s-work  for  a  hand 
peasant. 

Several  paragraphs  of  the  edict  are  taken  up  with  provi¬ 
sions  for  so  apportioning  the  burdens  on  the  holdings  thajb 
nothing  shall  prevent  their  dismemberment,  and  being  sold 
or  exchanged  in  single  parcels.  Among  these  provisions  is 
one  preventing  the  peasant  from  mortgaging  his  estate  above 
one  fourth  of  its  value.  Where  corn-rents  are  not  paid 
punctually  the  lord  of  the  manor  can  exact  services  instead. 

PART  II. 

The  class  of  holdings  treated  of  in  the  second  part  are 
those  held  at  will,  or  for  a  term  of  years  or  for  life.  In 
these  cases  the  landlord  gets  an  indemnity  of  one  half  of  the 
holdings  under  much  the  same  conditions  as  in  the  case  of 
the  hereditary  holdings.  When  the  conditions  differ  they 
do  so  in  favor  of  the  lord  of  the  manor. 

By  the  edict,  of  which  the  above  are  the  main  provisions, 
entirely  new  conditions  of  land  occupation  were  inaugurated, 
and  corresponding  changes  became  necessary  in  the  other 
branches  of  the  agricultural  system. 

The  “Edict  for  the  better  Cultivation  of  the  Land,”  pub¬ 
lished  on  the  same  day,  had  these  changes  in  view. 

Fully  to  understand  what  these  changes  were,  and  what 
was  the  nature  of  the  agricultural  reforms  to  be  introduced 
into  Prussia,  the  picture  of  the  peasant  community  as  a  mi- 
crocosmic  reproduction  of  the  old  community  of  the  mark 
must  be  kept  in  mind.  The  peasant  occupier’s  tenement  is 
situated  apart  from  his  land  in  a  village  or  township;  his 
estate  is  made  up  of  a  number  of  single  lots  or  parcels 
(Grundstiicke)  distributed  over  the  three  main  divisions  or 


104 


ECONOMIC  HISTORY. 


Fields  (Fluren,  Campi)  into  which  the  arable  mark  is  di¬ 
vided.  Often  intermixed  with  these  peasant  parcels,  and 
subject  to  the  same  obligatory  cultivation,  are  parcels  of  de¬ 
mesne  lands.  In  addition  to  his  individual  rights  of  posses¬ 
sion  in  the  arable  mark,  controlled  by  the  common  rights  of 
pasturage  on  the  stubbles,  he  has  common  rights  in  the 
common  pasture,  which  common  rights  he  shares  with  the 
lord  of  the  manor.  Besides  these  rights  he  has  rights  of 
pasture,  etc.,  in  the  forest  lands  of  the  demesne  proper.  The 
sum  total  of  these  individual  and  common  rights  make  up 
the  peasant  holding,  correlative  to  which  are  the  services  to 
be  rendered  to  the  manor.  As  long  as  these  services  were 
calculated  on  the  sum  total  of  the  rights  enjoyed  by  the 
tenant,  it  was  of  paramount  importance  that  no  dismember¬ 
ment  should  take  place.  Consequently,  even  in  the  case  of 
freeholders,  none  but  exceptional  dismemberments  were 
allowed. 

Apart  then  from  the  relations  between  landlord  and  ten¬ 
ant,  or  rather  inseparably  implicated  in  those  relations,  and 
therefore  requiring  simultaneous  regulation  are  the  common 
rights  of  the  peasants  themselves,  and  the  impediments 
which  these  common  rights  throw  in  the  way  of  individual 
cultivation,  and  the  free  use  of  the  rights  of  property  to  be 
granted. 

The  ruling  idea  of  the  “  Edict  for  the  better  Cultivation  of 
the  Land,”  as  of  its  predecessor,  and  indeed  of  the  whole 
legislation  connected  with  the  names  of  Stein  and  Harden- 
berg,  is  to  enfranchise  not  the  owner  of  land  merely,  but 
likewise  the  land  owned  by  him,  and  to  remove  every  im¬ 
pediment  in  the  way  of  the  soil  finding  its  way  out  of  hands 
less  able  to  cultivate  it  into  those  better  able  to  cultivate 
it.  Conformably  to  these  principles,  the  edict  in  question, 
in  the  first  place,  removes  all  restrictions  still  existing  in 
the  way  of  free  exchange  in  land,  in  so  far  as  private  rights 
(namely,  rights  arising  from  entails,  servitudes,  etc.)  are 
not  affected.  By  this  proviso  the  restrictions  contained  in 
paragraphs  six  and  seven  of  the  edict  of  1807  were  removed, 
the  difference  between  tenant’s  lands  and  demesne  land 


EDICTS  OF  STEIN  AND  HARDENBERG. 


105 


ceased,  and  the  lord  of  the  manor  could  freely  acquire  the 
former  without  the  previous  sanction  of  the  State.  On  the 
other  hand,  by  the  perfect  liberty  granted  for  dismemberment 
(the  maxim  being  laid  down  that  it  was  better  both  for  the 
cultivator  and  for  the  land  cultivated  that  the  former  should 
administer  a  small  unencumbered  estate  rather  than  a  large 
encumbered  one),  the  advocates  of  the  “  petite  culture  ”  were 
conciliated.  The  passage  in  the  edict  is  worth  quoting  in  ex - 
tenso ,  as  it  contains  very  explicitly  what  we  have  described  as 
the  ruling  idea  of  the  legislation  we  are  discussing ;  an  idea, 
it  is  true,  which  only  attained  its  full  development  forty 
years  later,  but  which,  nevertheless,  in  spite  of  the  obstacles 
thrown  in  its  way  by  the  successors  of  Stein  and  Hardenberg, 
took  sufficient  root  even  at  this  early  period  to  enable  us  to 
judge  of  its  fruits.  It  is  the  idea  of  ownership  versus  ten¬ 
ancy ',  and  of  absolute  freedom  of  exchange  and  disposal ; 
and  special  importance  attaches  to  it  as  representing  princi¬ 
ples  opposed  both  to  the  French  system  of  compulsory  divi¬ 
sion  and  to  the  English  system  of  tenancy,  primogeniture, 
and  strict  settlement.  The  passage  we  refer  to  runs  on  as 
follows :  — 

“The  proprietor  shall  henceforth  (excepting  always  where  the 
rights  of  third  parties  are  concerned)  be  at  liberty  to  increase  his 
estate,  or  diminish  it  by  buying  or  selling,  as  may  seem  good  to 
him.  He  can  leave  the  appurtenances  thereof  (the  i  grund- 
stiicke,  ’  or  parcels  distributed  in  the  three  Fields )  to  one  heir  or  to 
many,  as  he  pleases.  He  may  exchange  them  or  give  them  away, 
or  dispose  of  them  in  any  and  every  legal  way,  without  requiring 
any  authorization  for  such  changes. 

“This  unlimited  right  of  disposal  has  great  and  manifold  advan¬ 
tages.  It  affords  the  safest  and  best  means  for  preserving  the  pro¬ 
prietor  from  debt,  and  for  keeping  alive  in  him  a  lasting  and  lively 
interest  in  the  improvement  of  his  estate,  and  it  raises  the  general 
standard  of  cultivation. 

“The  first  of  these  results  is  obtained  by  the  power  it  gives  to 
the  actual  proprietor,  or  to  an  heir  upon  entering  on  his  estate,  to 
sell  such  portions  as  will  enable  him  to  provide  for  his  heirs  or  co¬ 
heirs,  as  the  case  may  be,  or  for  any  other  extraordinary  emer- 


106 


ECONOMIC  HISTORY . 


gency,  leaving  what  remains  of  the  property  unencumbered  with 
mortgages  or  settlements. 

“The  interest  in  the  estate  is  kept  alive  by  the  freedom  left  to 
parents  to  divide  their  estate  among  their  children  as  they  think 
fit,  knowing  that  the  benefit  of  every  improvement  will  be  reaped 
by  them. 

“Lastly  the  higher  standard  of  cultivation  will  be  secured  by 
land — which  in  the  hands  of  a  proprietor  without  means  would 
necessarily  deteriorate  —  getting  into  the  hands  of  a  proprietor 
with  means,  and  therefore  able  to  make  the  best  of  it.  Without 
this  power  of  selling  portions  of  his  property,  the  proprietor  is  apt 
to  sink  deeper  and  deeper  into  debt,  and  in  proportion  as  he  does 
so  the  soil  is  deprived  of  its  strength.  By  selling,  on  the  other 
hand,  he  becomes  free  of  debt  and  free  of  care,  and  obtains  the 
means  of  properly  cultivating  what  remains  to  him.  By  this  un¬ 
hindered  movement  in  the  possession  of  land,  the  whole  of  the 
soil  remains  in  a  good  state  of  cultivation;  and  this  point  once 
attained,  increased  industry  and  exertion  wil  1  make  it  possible  to 
attain  a  yet  higher  point;  whereas  a  backward  movement,  except 
as  the  result  of  extraordinary  mischances  from  without,  is  not  to 
be  apprehended. 

“But  there  is  yet  another  advantage  springing  from  this  power 
of  piecemeal  alienation  which  is  well  worthy  of  attention,  and 
which  fills  our  paternal  heart  with  especial  gladness.  It  gives, 
namely,  an  opportunity  to  the  so-called  small  folk  (kleine  Leute), 
cottiers,  gardeners,  boothmen,  and  day  laborers,  to  acquire  landed 
property,  and  little  by  little  to  increase  it.  The  prospect  of  such 
acquisition  will  render  this  numerous  and  useful  class  of  our  sub¬ 
jects  industrious,  orderly,  and  saving,  inasmuch  as  thus  only  will 
they  be  enabled  to  obtain  the  means  necessary  to  the  purchase  of 
land.  Many  of  them  will  be  able  to  w^ork  their  way  upwards,  and 
to  acquire  property,  and  to  make  themselves  remarkable  for  their 
industry.  The  State  will  acquire  a  new  and  valuable  class  of  in¬ 
dustrious  proprietors;  by  the  endeavor  to  become  such,  agriculture 
will  obtain  new  hands,  and  by  increased  voluntary  exertion,  more 
work  out  of  the  old  ones.” 

The  edict  next  exacts  as  a  supplementary  measure  to  the 
“Edict  for  the  Regulation  of  the  Relations  between  Lords 
of  the  Manor  and  their  Peasants,”  that  in  the  case  of  heredi- 


EDICTS  OF  STEIN  AND  HARDENBERG. 


107 


tary  leaseholds  (Erbpachte)  the  services  and  fines  may  be 
commuted  into  rent-charges,  and  these  rent-charges  redeemed 
by  a  capital  payment  calculated  at  four  per  cent. 

-  It  next  proceeds  to  deal  with  the  common  rights  of  the  peas¬ 
ants  and  of  the  lords;  and  here  it  fairly  owns  its  inability  to 
carry  out  the  principle  of  the  free  owner  on  the  free  soil. 
The  great  mass  of  the  peasant  holdings  are  dispersed  in 
small,  open,  “  commonable,  ”  intermixed  fields  over  the  area 
of  the  arable  mark ;  and  the  common  rights  of  pasturage  over 
the  arable  mark  necessarily  chain  down  the  individual  culti¬ 
vator  to  the  modes  of  cultivation  compatible  with  these  com¬ 
mon  rights.  To  disentangle  this  complicated  web  must  be 
the  work  of  time  and  of  special  legislation.  The  edict  there¬ 
fore  announces  a  future  law  on  the  subject,  and  for  the  pres¬ 
ent  confines  itself  to  making  provisions  by  which  one  third 
part  of  such  “  commonable  ”  fields  can  be  freed  from  the  com¬ 
mon  rights  of  pasturage  and  placed  at  the  absolute  disposal 
of  individual  proprietors.  The  rights  of  pasturage  in  the 
forest  lands  of  the  manor  are  more  easily  disposed  of.  The 
advantageous  terms  on  which  full  rights  of  property  are 
obtainable  by  the  peasants  render  it  possible  to  make  strin¬ 
gent  regulations  in  regard  to  the  exercise  of  those  rights, 
in  the  interest  of  the  landlord  and  for  the  preservation  of 
the  forests. 

To  guard  against  the  possibility  of  a  return  to  the  double 
ownership  system,  the  edict  lays  down  the  rule  that  though  a 
landed  proprietor  may  settle  laborers  on  his  estate,  and  pay 
for  their  services  in  land,  such  contracts  are  never  to  be 
made  for  more  than  twelve  years. 

The  edict  concludes  by  expressing  it  to  be  his  Majesty’s 
wish  and  will  that  agricultural  societies  should  be  formed  in 
every  part  of  the  country  for  the  purpose  of  collecting  and 
diffusing  knowledge.  The  expenses  of  these  societies  and 
the  salaries  of  their  secretaries  will  be  paid  out  of  the 
exchequer,  and  the  societies  themselves  will  be  placed  in 
communication  with  a  central  office  in  the  capital,  whose 
business  it  will  also  be  to  establish  and  maintain  model 
farms  in  various  parts  of  the  country  for  the  diffusion  of 


108 


ECONOMIC  HISTORY. 


agricultural  knowledge.  Besides  this  more  or  less  unofficial 
machinery,  provision  is  made  for  official  agricultural  boards 
to  be  established  in  each  district;  but  these  arrangements, 
having  been  superseded  by  subsequent  legislation  need  not 
be  referred  to. 

The  two  edicts  of  the  14th  of  September,  1811,  may  be 
considered  as  the  culminating  point  of  the  legislation  which 
goes  by  the  name  of  Stein  and  Hardenberg. 


THE  ORDERS  IN  COUNCIL. 


109 


V. 

THE  ORDERS  IN  COUNCIL. 

From  Levi’s  History  of  British  Commerce1  (2ded.),  pp.  101-113. 

'  I  AHE  political  horizon  was  ominously  dark  at  the  com- 
mencement  of  the  nineteenth  century.  While  griev¬ 
ously  suffering  from  the  high  prices  of  corn  and  provisions 
and  oppressed  by  the  burden  of  a  contest  already  sufficiently 
prolonged,  England  was  threatened  by  the  renewal  of  an¬ 
other  armed  neutrality  on  the  part  of  the  Northern  powers, — 
a  neutrality  based  on  a  new  code  of  maritime  law  then 
deemed  utterly  inconsistent  with  the  rights  of  this  country. 
The  Northern  powers  wished  to  proclaim  that  free  ships 
should  make  free  goods ;  but  England  was  determined  that 
the  trade  of  the  enemy  should  not  be  carried  on  by  neutrals. 
The  Northern  powers  asserted  that  only  contraband  goods 
should  be  excluded  from  the  trade  of  neutrals,  and  these  of 
certain  definite  and  known  articles.  England  did  not  wish 
the  enemy  to  obtain  timber,  hemp,  and  other  articles,  which, 
though  not  contraband  of  war,  are  still  essential  for  warfare. 
The  Northern  powers  declared  that  no  blockade  should  be 
held  valid  unless  real.  England  had  already  assumed  the 
right  to  treat  whole  coasts  as  blockaded  in  order  to  prevent 
the  enemy  receiving  supplies  from  any  quarter.  And  when 
the  Northern  powers  added  that  a  merchant  vessel  accompa¬ 
nied  and  protected  by  a  belligerent  ship  ought  to  be  safe  from 
the  right  of  search,  England  was  not  prepared  to  recognize 
the  authority  of  such  ships,  and  would  place  no  limit  to  the 
action  of  her  cruisers.  When,  therefore,  Russia,  Denmark, 
and  Sweden  entered  into  a  convention  to  enforce  the  princi- 


1  London :  John  Murray,  1880. 


110 


ECONOMIC  HISTORY. 


pies  of  the  armed  neutrality,  and  in  pursuance  of  the  same 
Russia  caused  an  embargo  to  be  laid  on  all  British  vessels  in 
her  ports,  the  British  Government,  ill-disposed  to  bear  with 
such  provocation,  issued  a  proclamation  on  Jan.  14,  1801, 
authorizing  reprisals,  and  laying  an  embargo  on  all  Russian, 
Swedish,  and  Danish  vessels  in  British  ports.  What  fol¬ 
lowed  is  well  known,  and  with  the  battle  of  Copenhagen 
the  Northern  confederacy  was  completely  dissolved.  By  this 
time  Mr.  Pitt  had  given  in  his  resignation,  and  a  change  of 
government  took  place,  which  led  to  a  change  of  policy 
towards  France,  and  to  negotiations  which  ended  with  the 
conclusion  of  the  treaty  of  Amiens.1 

But,  alas !  from  whatever  cause  it  was,  that  peace  was  of 
short  duration,  and  more  than  ever  the  patriotic  spirit  of  the 
people  was  evoked  to  defend  British  soil  against  Britain’s 
inveterate  enemies.2  From  class  to  class  the  national  enthu¬ 
siasm  spread  and  increased,  and  even  the  merchants,  setting 
aside  their  books  and  business,  issued  a  declaration  promis¬ 
ing  in  a  solemn  manner  to  use  every  exertion  to  rouse  the 
spirit  and  to  assist  the  resources  of  the  kingdom;  to  be  ready 
with  their  services  of  every  sort  and  on  every  occasion  in  its 
defence,  and  rather  to  perish  altogether  than  live  to  see  the 
honor  of  the  British  name  tarnished,  or  that  sublime  inheri¬ 
tance  of  greatness,  glory,  and  liberty  destroyed,  which  de¬ 
scended  to  them  from  their  forefathers,  and  which  they  were 
determined  to  transmit  to  their  posterity.  Again  was  Mr. 
Pitt  called  to  be  prime  minister,  as  the  only  man  who  could 
really  be  trusted  in  times  of  so  much  anxiety  and  peril. 
And  then  it  was  that  that  continental  system  was  inaugu¬ 
rated  which  made  of  oceans  and  seas  one  vast  battle-field  of 
strife  and  bloodshed. 

Fully  to  understand  the  policy  of  this  country  as  regards 

1  Peace  was  ratified  on  October  10,  1801 ;  and  the  treaty  of  Amiens  was 
concluded  March  25,  1802. 

2  On  May  16,  1803,  an  order  in  council  was  made,  issuing  letters  of  marque 
and  reprisals  against  France,  and  another  laying  an  embargo  on  all  ships  be¬ 
longing  to  the  French  and  Batavian  republics.  Reprisals  against  Spain  were 
ordered  December  19,  1805;  against  Prussia  on  May  14,  1806;  and  against 
Russia  on  December  18,  1807. 


THE  ORDERS  IN  COUNCIL. 


Ill 


these  orders  in  council,  we  must  briefly  retrace  our  steps  by 
examining  the  measures  taken  in  previous  wars.  During  the 
Seven  Years’  War,  which  ended  in  1768,  France,  hemmed  in 
on  all  sides  by  England  and  hindered  by  the  British  naval 
force  from  carrying  on  any  trade  with  her  West  India  colo¬ 
nies,  adopted  the  plan  of  relaxing  her  colonial  monopoly,  and 
allowing  neutral  ships  to  carry  the  produce  of  those  islands 
to  French  or  foreign  ports  in  Europe.  The  produce  being 
thus  carried  really  or  ostensibly  on  neutral  account,  it  was 
assumed  that  no  danger  of  capture  could  be  incurred.  But 
the  prize  courts  of  England  condemned  such  vessels  as  were 
captured  while  engaged  in  the  trade,  and  the  rule  was  then 
adopted,  called  the  rule  of  1756, 1  that  a  neutral  has  no  right 
to  deliver  a  belligerent  from  the  pressure  of  his  enemy’s 
hostilities  by  trading  with  his  colonies  in  time  of  war  in  a 
way  that  was  prohibited  in  time  of  peace.  As  Sir  William 
Scott  said,  “  The  general  rule  is  that  the  neutral  has  a  right 
to  carry  on  in  time  of  war  his  accustomed  trade  to  the 
utmost  extent  of  which  that  accustomed  trade  is  capable. 
Yery  different  is  the  case  of  a  trade  which  the  neutral  has 
never  possessed;  which  he  holds  by  no  title  of  use  and  habit 
in  time  of  peace ;  and  which,  in  fact,  he  can  obtain  in  war 
by  no  other  title  than  by  the  success  of  the  one  belligerent 
against  the  other,  and  at  the  expense  of  that  very  belligerent 
under  whose  success  he  sets  up  his  title.”  During  the 
American  war  this  principle  did  not  come  practically  into 
action,  because,  although  then  also  the  French  government 
opened  the  ports  of  her  West  India  islands  to  the  ships  of 
neutral  powers,  it  had  the  wisdom  to  do  so  before  hostilities 
were  commenced,  and  not  after. 

In  accordance  with  these  principles,  when  the  war  of  the 
French  Revolution  commenced,  instructions  were  given  on 

1  The  rule  of  1756  had  been  acted  upon  even  by  France  on  previous  occa¬ 
sions.  See  Note  1,  On  the  practice  of  the  British  Prize  Courts  with  regard  to 
the  Colonial  trade  of  the  Enemy  during  the  American  War,  in  6  Rob.  Rep. 
App. ;  and  Considerations  sur  /’ Admission  des  Navires  neutres  aux  Colonies  f ran - 
poises  de.  I'Amerique  en  Terns  da  Guerre,  p.  13,  1779;  and  see  the  Wilhelmina, 
4  Rob.  Rep.,  p.  4 ;  and  the  Immanuel  Tudor  —  Leading  Cases  of  Mercantile 
Law,  p  814. 


112 


ECONOMIC  HISTORY. 


Nov.  6,  1793,  to  the  commanders  of  British  ships  of  war  and 
privateers,  ordering  them  “to  stop  and  detain  for  lawful 
adjudication  all  vessels  laden  with  goods,  the  produce  of  any  - 
French  colony,  or  carrying  provisions  or  other  supplies  for 
the  use  of  any  such  colony.  ”  And  this  order  was  the  more 
necessary  from  the  fact  that  American  ships  were  crowding 
the  ports  of  the  French  West  Indies,  where  the  flag  of  the 
United  States  was  made  to  protect  the  property  of  the  French 
planters.  Great  numbers  of  ships  under  American  colors 
were  thus  taken  in  the  West  Indies  and  condemned,  the 
fraudulent  pretences  of  neutral  property  in  the  cargoes  being 
too  gross  to  be  misunderstood.  Complaints  were,  however, 
made  of  the  hardships  of  this  practice  on  the  bona  fide 
American  trader,  and  in  January,  1794,  the  instructions 
were  so  far  amended  that  the  direction  was  to  seize  “  such 
vessels  as  were  laden  with  goods  the  produce  of  the  French 
West  India  Islands,  and  coming  directly  from  any  ports  of 
the  said  islands  to  Europe .  ”  This  rule  continued  in  force 
till  1798,  when  again  it  was  relaxed  by  ordering  that  vessels 
should  be  seized  “  laden  with  the  produce  of  any  island  or 
settlement  of  France,  Spain,  or  Holland,  and  coming  di¬ 
rectly  from  any  port  of  the  said  island  or  settlement  to  any 
port  in  Europe,  not  being  a  port  of  this  kingdom,  or  of  the 
country  to  which  the  vessel,  being  neutral,  should  belong.” 
European  neutrals  were  thus  permitted  to  bring  the  produce 
of  the  hostile  colonies  from  thence  to  ports  of  their  own  coun¬ 
tries  ;  and  European  or  American  neutral  ships  might  carry 
such  produce  direct  to  England.  But  when  the  war  was  re¬ 
sumed  in  1803  the  rule  of  1798  was  again  put  in  force,  and 
instructions  were  given  “not  to  seize  any  neutral  vessels 
which  should  be  found  carrying  on  trade  directly  between 
the  colonies  of  the  enemy  and  the  neutral  country  to  which 
the  vessel  belonged,  and  laden  with  property  of  the  inhabi¬ 
tants  of  such  neutral  country,  provided  that  such  neutral 
vessel  should  not  be  supplying  nor  should  have  on  the  out¬ 
ward  voyage  supplied  the  enemy  with  any  articles  of  contra¬ 
band  of  war,  and  should  not  be  trading  with  any  blockaded 
ports.  ” 


THE  ORDERS  IN  COUNCIL. 


113 


By  thus  allowing,  however,  neutrals  to  trade  safely  to  and 
from  neutral  ports,  means  were  opened  to  them  to  clear  out 
for  a  neutral  port,  and  under  cover  of  that  pretended  desti¬ 
nation  to  make  a  direct  voyage  from  the  colony  to  the  par¬ 
ent  State,  or  really  to  proceed  to  some  neutral  country, 
and  thence  re-export  the  cargo  in  the  same  or  a  different 
bottom  to  whichever  European  market,  neutral  or  hostile, 
they  might  prefer.  The  former,  on  an  assumed  voyage  to 
the  parent  State,  being  the  shortest  and  most  convenient 
method,  was  chiefly  adopted  by  the  Dutch  on  their  homeward 
voyages,  because  a  pretended  destination  for  Prussian,  Swed¬ 
ish,  or  Danish  ports  in  the  North  Sea  or  the  Baltic  was  a 
plausible  mask,  even  in  the  very  closest  approach  the  ship 
might  make  to  the  Dutch  coast  down  to  the  moment  of  her 
slipping  into  port.  The  latter  method,  or  the  stopping  at  an 
intermediate  neutral  country  was  commonly  preferred  by  the 
Spaniards  and  French  in  bringing  home  their  colonial  pro¬ 
duce,  because  no  pretended  neutral  destination  could  be  given 
that  would  consist  with  the  geographical  position  and  course 
of  a  ship  coming  directly  from  the  West  Indies,  if  met  with 
near  the  end  of  her  voyage  in  the  latitude  of  their  principal 
ports.  The  American  flag  in  particular  was  a  cover  that 
could  scarcely  ever  be  adapted  to  the  former  method  of  elud¬ 
ing  our  hostilities,  but  it  was  found  peculiarly  convenient  in 
the  latter.  Such  is  the  position  of  the  United  States,  and 
such  was  the  effect  of  the  trade-winds  that  European  vessels, 
homeward  bound  from  the  West  Indies,  could  touch  at  their 
ports  with  very  little  inconvenience  or  delay ;  and  such  was 
also  the  case,  though  in  a  less  degree  with  regard  to  vessels 
coming  from  the  remotest  parts  of  South  America  or  the 
East  Indies.  The  passage  from  the  Gulf  of  Mexico,  espe¬ 
cially,  runs  so  close  along  the  North  American  shore  that 
ships  bound  from  the  Havannah,  from  Yera  Cruz,  and  other 
great  Spanish  ports  bordering  on  that  gulf  to  Europe  could 
touch  at  certain  ports  in  the  United  States  with  scarcely 
any  deviation.  On  an  outward  voyage  to  the  East  and  West 
Indies  the  proper  course  would  be  more  to  the  southward 
than  would  well  consist  with  touching  on  North  America ; 

8 


114 


ECONOMIC  HISTORY . 


yet  the  deviation  for  that  purpose  was  not  a  very  formidable 
inconvenience.  From  these  causes  the  protection  given  by 
the  American  flag  to  the  intercourse  between  our  European 
enemies-and  their  colonies  was  chiefly  in  the  way  of  a  double 
voyage,  in  which  America  was  the  half-way  house  or  central 
point  of  communication.  The  fabrics  and  commodities  of 
France,  Spain,  and  Holland  were  brought  under  American 
colors  to  ports  in  the  United  States,  and  from  thence  re¬ 
exported  under  the  same  flag  for  the  supply  of  the  hostile 
colonies.  Again,  the  produce  of  these  colonies  was  brought 
in  a  like  manner  to  the  American  ports  and  thence  reshipped 
to  Europe.  But  the  Americans  went  still  farther.  The 
ports  of  this  kingdom  having  been  constituted  by  the  royal 
instructions  of  1798,  legitimate  places  of  destination  for 
neutrals  coming  with  cargoes  of  produce  directly  from  the 
hostile  colonies,  the  American  merchants  made  a  pretended 
destination  to  British  ports  a  convenient  cover  for  a  voyage 
from  the  hostile  colonies  to  Europe,  which  their  flag  could 
not  otherwise  give,  and  thus  rivalled  the  neutrals  of  the  old 
world  in  this  method  of  protecting  the  West  India  trade  of 
the  enemy,  while  they  nearly  engrossed  the  other.  As  the 
war  advanced,  after  the  Peace  of  Amiens,  the  neutrals  be¬ 
came  bolder  and  more  aggressive.  American  ships  were 
constantly  arriving  at  Dutch  and  French  ports  with  sugar, 
coffee,  and  other  productions  of  the  French  and  Spanish 
West  Indies.  And  East  India  goods  were  imported  by  them 
into  Spain,  Holland,  and  France. 

By  these  and  other  means  Hamburgh,  Altona,  Emden, 
Gottenburgh,  Copenhagen,  Lisbon,  and  other  neutral  mar¬ 
kets  were  glutted  with  the  produce  of  the  West  Indies  and 
the  fabrics  of  the  East,  brought  from  the  prosperous  colonies 
of  powers  hostile  to  this  country.  By  the  rivers  and  canals 
of  Germany  and  Flanders  these  were  floated  into  the  ware¬ 
houses  of  the  enemy  or  circulated  for  the  supply  of  his  cus¬ 
tomers  in  neutral  countries.  He  rivalled  the  British  planter 
and  merchant  throughout  the  continent  of  Europe,  and  in 
all  ports  of  the  Mediterranean,  and  even  supplanted  the 
manufacturers  of  Manchester,  Birmingham,  and  Yorkshire, 


THE  ORDERS  IN  COUNCIL. 


115 


and  by  these  means  the  hostile  colonies  derived  benefit,  and 
not  inconvenience,  from  the  enmity  of  Great  Britain.  What 
moreover,  especially  injured  the  commerce  of  this  country 
was  the  increase  in  the  cost  of  importation  into  this  country 
from  the  British  colonies,  from  freight,  insurance,  and  other 
charges,  which  taken  together  were  as  much  as,  if  not  supe¬ 
rior  to,  those  to  which  the  enemy  was  subjected  in  his  covert 
and  circuitous  trade.  It  was  a  general  complaint,  therefore, 
that  the  enemy  carried  on  colonial  commerce  under  the 
neutral  flag  cheaply,  as  well  as  safely ;  that  he  was  enabled 
not  only  to  elude  our  hostilities,  but  to  rival  our  mer¬ 
chants  and  planters  in  the  European  markets;  that  by  the 
same  means  the  hostile  treasuries  were  filled  with  a  copious 
stream  of  revenue ;  and  that  by  this  licentious  use  of  the 
neutral  flag,  the  enemy  was  enabled  to  employ  his  whole 
military  marine  for  purposes  of  offensive  war,  without  being 
obliged  to  maintain  a  squadron  or  a  ship  for  the  defence  of 
his  colonial  ports.  It  was,  moreover,  contended  that,  since 
neutral  States  have  no  right,  but  through  our  own  gratuitous 
concession,  to  carry  on  the  colonial  trade  of  the  enemy,  we 
might  after  a  reasonable  notice  withdraw  that  ruinous  in¬ 
dulgence  ;  that  the  neutral  did  not  require  such  principles ; 
that  the  comparative  cheapness  of  his  navigation  gives  him 
in  every  open  market  a  decisive  advantage ;  that  in  the  com¬ 
merce  of  other  neutral  countries  he  could  not  fail  to  sup¬ 
plant  the  belligerent;  and  that  he  obtained  an  increase  of 
trade  by  purchasing  from  one  belligerent  and  selling  to  his 
enemies  the  merchandise  for  which,  in  time  of  peace,  they 
depended  on  each  other. 

Such  complaints  made  against  neutral  States  found  a  pow¬ 
erful  echo  by  the  publication  of  a  work  entitled  “War  in 
Disguise  and  the  Frauds  of  the  Neutral  Flag,”  supposed  to 
have  been  written  by  Mr.  J ames  Stephen,  the  real  author  of 
the  orders  in  council.  The  British  government  did  not  see 
its  way  at.  once  to  proceed  in  the  direction  of  prohibiting  to 
neutral  ships  the  colonial  trade,  which  they  had  enjoyed  for 
a  considerable  time ;  but  the  first  step  was  taken  to  paralyze 
the  resources  of  the  enemy,  and  to  restrict  the  trade  of  neu- 


116 


ECONOMIC  HISTORY. 


trals  by  the  issue  of  an  order  in  council  in  May,  1806,  de¬ 
claring  that  all  the  coasts,  ports,  and  rivers  from  the  Elbe  to 
Brest  should  be  considered  blockaded,  though  the  only  por¬ 
tion  of  -those  coasts  rigorously  blockaded  was  that  included 
between  Ostend  and  the  mouth  of  the  Seine,  in  the  ports  of 
which  preparations  were  made  for  the  invasion  of  England. 
The  northern  ports  of  Germany  and  Holland  were  left  partly 
open,  and  the  navigation  of  the  Baltic  altogether  free. 

Napoleon,  then  in  the  zenith  of  his  power,  saw  in  this  order 
in  council  a  fresh  act  of  wantonness,  and  he  met  it  by  the  is¬ 
sue  of  the  Berlin  decree  of  Nov.  21,  1806.  In  that  document, 
remarkable  for  its  boldness  and  vigor,  Napoleon  charged  Eng¬ 
land  with  having  set  at  naught  the  dictates  of  international 
law,  with  having  made  prisoners-of-war  of  private  individu¬ 
als,  and  with  having  taken  the  crews  out  of  merchant  ships. 
He  charged  this  country  with  having  captured  private  prop¬ 
erty  at  sea,  extended  to  commercial  ports  the  restrictions 
of  blockade  applicable  only  to  fortified  places,  declared  as 
blockaded  places  which  were  not  invested  by  naval  forces, 
and  abused  the  right  of  blockade  in  order  to  benefit  her  own 
trade  at  the  expense  of  the  commerce  of  continental  States. 
He  asserted  the  right  of  combating  the  enemy  with  the  same 
arms  used  against  himself,  especially  when  such  enemy  ig¬ 
nored  all  ideas  of  justice,  and  every  liberal  sentiment  which 
civilization  imposes.  He  announced  his  resolution  to  apply 
to  England  the  same  usages  which  she  had  established  in  her 
maritime  legislation.  He  laid  down  the  principles  which 
France  was  resolved  to  act  upon  until  England  should  recog¬ 
nize  that  the  rights  of  war  are  the  same  on  land  as  on  sea, 
that  such  rights  should  not  be  extended  either  against  pri¬ 
vate  property  or  against  persons  not  belonging  to  the  mili¬ 
tary  or  naval  forces,  and  that  the  right  of  blockade  should 
be  restricted  to  fortified  places  truly  invested  by  sufficient 
forces.  And  upon  these  premises  the  decree  ordered:  1st, 
that  the  British  islands  should  be  declared  in  a  state  of 
blockade;  2d,  that  all  commerce  and  correspondence  with 
the  British  islands  should  be  prohibited,  and  that  letters 
addressed  to  England  or  Englishmen  written  in  the  English 


THE  ORDERS  IN  COUNCIL. 


117 


language  should  be  detained  and  taken ;  3d,  that  every  Brit¬ 
ish  subject  found  in  a  country  occupied  by  French  troops  or 
by  those  of  their  allies  should  be  made  a  prisoner-of-war; 
4th,  that  all  merchandise  and  property  belonging  to  British 
subjects  should  be  deemed  a  good  prize ;  5th,  that  all  com¬ 
merce  in  English  merchandise  should  be  prohibited,  and 
that  all  merchandise  belonging  to  England  or  her  colonies, 
and  of  British  manufacture,  should  be  deemed  a  good  prize ; 
and  6th,  that  no  vessel  coming  direct  from  England  or  her 
colonies  be  allowed  to  enter  any  French  port  or  any  port 
subject  to  French  authority ;  and  that  every  vessel  which,  by 
means  of  a  false  declaration,  should  evade  such  regulations 
should  at  once  be  captured. 

The  British  government  lost  no  time  in  retaliating  against 
France  for  so  bold  a  course;  and  on  Jan.  7,  1807,  an  order 
in  council  was  issued,  which,  after  reference  to  the  orders 
issued  by  France,  enjoined  that  no  vessel  should  be  allowed 
to  trade  from  one  enemy’s  port  to  another,  or  from  one  port 
to  another  of  a  French  ally’s  coast  shut  against  English  ves¬ 
sels  ;  and  ordered  the  commanders  of  the  ships  of  war  and  pri¬ 
vateers  to  warn  every  neutral  vessel  coming  from  any  such 
port,  and  destined  to  another  such  port,  to  discontinue  her 
voyage,  and  that  any  vessel,  after  being  so  warned  which 
should  be  found  proceeding  to  another  such  port  should  be 
captured  and  considered  as  lawful  prize.  This  order  in  coun¬ 
cil  having  reached  Napoleon  at  Warsaw,  he  immediately 
ordered  the  confiscation  of  all  English  merchandise  and  co¬ 
lonial  produce  found  in  the  Hanseatic  Towns.  Bourrienne, 
Napoleon’s  commissioner  at  Hamburg,  declared  that  all  who 
carried  on  trade  with  England  supported  England;  that  it 
was  to  prevent  such  trading  that  France  took  possession  of 
Hamburg ;  that  all  English  goods  should  be  produced  by  the 
Hamburghers  for  the  purpose  of  being  confiscated ;  and  that 
in  forty-eight  hours,  domiciliary  visits  would  be  paid  and 
military  punishments  inflicted  on  the  disobedient.  But 
Britain  in  return  went  a  step  further,  and  by  order  in  coun¬ 
cil,  Nov.  11, 1807,  declared  all  the  ports  and  places  of  France, 
and  those  of  her  allies  and  of  all  countries  where  the  English 


118 


ECONOMIC  HISTORY . 


flag  was  excluded,  even  though  they  were  not  at  war  with 
Britain,  should  be  placed  under  the  same  restrictions  for  com¬ 
merce  and  navigation  as  if  they  were  blockaded ;  and  conse- 
quentlyThat  ships  destined  to  those  ports  should  be  liable  to 
the  visit  of  British  cruisers  at  a  British  station,  and  there 
subjected  to  a  tax  to  be  imposed  by  the  British  Parliament.1 

Napoleon  was  at  Milan  when  this  order  in  council  was 
issued,  and  forthwith,  on  December  17,  the  famous  decree 
appeared  by  which  he  imposed  on  neutrals  just  the  contrary 
of  what  was  prescribed  to  them  by  England,  and  further  de¬ 
clared  that  every  vessel,  of  whatever  nation,  that  submitted 
to  the  order  in  council  of  November  11  should  by  that  very 
act  become  denationalized,  considered  as  British  property, 
and  condemned  as  a  good  prize.  The  decree  placed  the  Brit¬ 
ish  islands  in  a  state  of  blockade,  and  ordered  that  every 
ship,  of  whatever  nation,  and  with  whatever  cargo,  proceed¬ 
ing  from  English  ports  or  English  colonies  to  countries 
occupied  by  English  troops,  or  going  to  England,  should  be  a 
good  prize.  This  England  answered  by  the  order  in  council 
of  April  26,  1809,  which  revoked  the  order  of  1807  as  re¬ 
gards  America,  but  confirmed  the  blockade  of  all  the  ports 
of  France  and  Holland,  their  colonies  and  dependencies. 
And  then  France,  still  further  incensed  against  England, 
issued  the  tariff  of  Trianon,  dated  Aug  5,  1810,  completed  by 
the  decree  of  St.  Cloud  of  September  12  and  of  Fontainebleau 
of  October  19,  which  went  the  length  of  ordering  the  seizure 
and  burning  of  all  British  goods  found  in  France,  Germany, 

1  One  of  the  fruits  of  the  great  blockade  was  the  introduction  of  beet-root 
sugar.  In  1810,  the  price  of  sugar  being  very  high,  experiments  were  made  to 
make  sugar  from  the  beet-root,  and  the  results  were  encouraging.  In  1811  and 
1812  the  Government  put  at  the  disposal  of  the  Minister  of  Agriculture  100,000 
arpents  of  land  and  l,000,000f.,  as  well  as  the  exemption  from  all  taxes  on 
native  sugar,  and  works  for  the  purpose  were  constructed  all  over  the  country. 
But  as  soon  as  the  blockade  was  removed  native  sugar  could  no  longer  com¬ 
pete  with  foreign  sugar,  and  most  of  the  works  were  abandoned.  In  1812 
Benjamin  Delessert  found  the  way  of  making  the  grains  of  beet-root  sugar  as 
fine  as  those  of  cane  sugar.  And  Vilmorin  was  able  to  make  a  kind  of  white 
beet-root  very  nearly  as  rich  as  the  beet-root  of  Silesia.  In  1829  there  were 
100  sugar  factories,  which  produced  5,000,000  kilos  of  sugar.  In  1832  beet 
production  was  double.  In  1837  there  were  436  sugar  works,  and  now  the  beet¬ 
root  enters  largely  in  the  sugar  industry  all  over  the  Continent. 


THE  ORDERS  IN  COUNCIL. 


119 


Holland,  Italy,  Spain,  and  in  every  place  occupied  by  French 
troops.  Strange  infatuation!  and  how  many  States  took 
part  in  this  mad  act  of  vindictiveness!  The  princes  of  the 
Ehenish  Confederation  hastened  to  execute  it,  some  for  the 
purpose  of  enriching  themselves  by  the  wicked  deed,  some 
out  of  hatred  towards  the  English,  and  some  to  show  their 
devotion  towards  their  master.  From  Carlsruhe  to  Munich, 
from  Cassel  to  Dresden  and  Hamburg,  everywhere,  bonfires 
were  made  of  English  goods.  And  so  exacting  were  the 
French  that  when  Frankfort  exhibited  the  least  hesitation  in 
carrying  out  the  decree  French  troops  were  sent  to  execute 
the  order. 

By  means  such  as  these  the  commerce  of  the  world  was 
greatly  deranged,  if  not  destroyed  altogether ;  and  none  suf¬ 
fered  more  from  it  than  England  herself.  Was  it  not  enough 
to  be  effectually  shut  out  from  all  commerce  with  French 
ports,  that  we  should  have  provoked  the  closing  of  neutral 
ports  also  ?  Was  it  politic,  at  a  time  when  our  relations  with 
the  principal  powers  were  in  a  condition  so  critical,  to  alien¬ 
ate  from  us  all  the  neutral  States  of  Europe  ?  Was  it  wise 
to  inflict  so  grievous  an  injury  upon  neutral  States,  as  to 
force  them  to  make  common  cause  with  the  enemy  ?  It  is 
scarcely  possible  to  describe  at  what  peril  the  commerce  of 
the  world  was  carried  on.  The  proceedings  of  the  Court  of 
Admiralty  are  full  of  the  most  romantic  incidents.  An 
American  ship1  with  a  cargo  of  tobacco  was  sent  from  Amer¬ 
ica  to  Vigo,  or  to  a  market  for  sale.  At  Vigo  the  tobacco 
was  sold  under  contract  to  deliver  it  at  Seville  at  the  master’s 
risk,  and  the  vessel  was  going  to  Seville  to  deliver  the  cargo 
when  she  was  captured.  A  British  vessel2  was  separated 
from  her  convoy  during  a  storm  and  brought  out  by  a  French 
lugger  which  came  up  and  told  the  master  to  stay  by  her  till 
the  storm  moderated  when  they  would  send  a  boat  on  board. 
The  lugger  continued  alongside  sometimes  ahead  and  some¬ 
times  astern  and  sometimes  to  windward  for  three  or  four 
hours.  But  a  British  frigate  coming  in  sight  gave  chase  to 

1  The  “  Atlas,”  3  Rob.  Rep.,  p.  299. 

2  The  “Edward  and  Mary,”  3  Rob.  Rep.,  p.  305. 


120 


ECONOMIC  HISTORY. 


the  lugger  and  captured  her,  during  which  time  the  ship 
made  her  escape,  rejoined  the  convoy  and  came  into  Poole. 
Ships  were  taken  because  they  were  sailing  to  false  destina¬ 
tions  under  false  papers,  false  flags,  false  certificates  of 
ownership,  and  false  bills  of  sale.  They  were  seized  for 
running  the  blockade,  and  for  escaping  from  blockaded  ports. 
They  were  arrested  for  carrying  despatches,  military  men, 
and  contraband  of  war.  In  every  way,  at  every  point  of  the 
ocean,  the  pursuit  was  carried  on,  till  the  seas  were  cleared  of 
merchant  ships,  and  the  highway  of  nations,  the  widest  and 
freest  arena  for  trade,  was  converted  into  an  amphitheatre 
for  the  display  of  the  wildest  and  worst  excesses  of  human 
cupidity  and  passions. 

But  a  greater  evil  than  even  this  extreme  derangement  of 
maritime  commerce  was  that  which  flowed  from  the  system 
of  licenses,1  an  evil  which  undermined  the  first  principles  of 
commercial  morality.  It  was  forcibly  stated  by  the  Marquis 
of  Lansdowne  that  the  commerce  of  the  country  was  one 
mass  of  simulation  and  dissimulation;  that  our  traders  crept 
along  the  shores  of  the  enemy  in  darkness  and  silence,  wait¬ 
ing  for  an  opportunity  of  carrying  into  effect  the  simulative 
means  by  which  they  sought  to  carry  on  their  business ;  that 
such  a  system  led  to  private  violation  of  morality  and  honor 
of  the  most  alarming  description ;  and  that  instead  of  bene¬ 
fiting  our  commerce,  manufactures,  and  resources,  the  orders 
in  council  diminished  our  commerce,  distressed  our  manu¬ 
factures,  and  lessened  our  resources.  Yet  all  these  warnings 
and  expostulations  were  unheeded.  The  national  mind  was 
preoccupied  by  the  one  thought  of  compelling  France  and  her 
military  leader  to  a  complete  submission;  and  no  considera¬ 
tion  of  a  commercial  or  pecuniary  character,  no  regard  to  the 
bearing  of  her  measures  upon  other  countries  were  sufficient 
to  induce  a  reversal  of  this  military  and  naval  policy. 

Upwards  of  fifteen  years  had  elapsed  since  the  first  shot 
was  fired  between  England  and  France  after  the  great  revolu- 

1  The  number  of  commercial  licenses  granted  for  imports  and  exports  was 
68  in  1802,  836  in  1803,  1,141  in  1804,  791  in  1805,  1,620  in  1806,  2,606  in  1807, 
4,910  in  1808,  15,226  in  1809,  18,356  in  1810,  and  7,602  in  1811 


THE  ORDERS  IN  COUNCIL. 


121 


tion,  and  yet  the  two  nations*  were  as  intent  as  ever  on 
securing  their  mutual  destruction.  England  had  indeed 
learned  by  this  time  to  make  light  of  all  such  decrees,  and 
she  had  found  by  experience  that  British  "goods  found  their 
way  to  the  Continent  in  spite  of  all  vindictive  measures. 
But  the  attitude  of  the  United  States  became  more  and  more 
threatening,  and  the  nations  saw  an  absolute  necessity  for 
revising  the  policy  of  the  orders  in  council.  For  years  past 
Lord  Temple,  Lord  Castlereagh,  Mr.  Perceval,  and  Sir  John 
Nichols  had  brought  the  subject  before  the  House,  and  many 
a  long  discussion  had  taken  place  on  the  subject.  In  their 
opinion  this  country  had,  without  any  alleged  provocation 
from  the  United  States  of  America,  interrupted  nearly  the 
whole  of  their  commerce  with  Europe,  and  they  held  that 
such  orders  in  council  were  unjust  and  impolitic,  and  that 
the  issuing  of  them  at  the  time  and  under  the  circumstances 
was  an  act  of  the  utmost  improvidence  and  rashness.  Yet 
the  nation  was  disposed  to  be  guided  by  the  government ;  and 
when  Lord  Grenville  moved  resolutions  of  similar  import  in 
1809  he  met  with  no  better  response.  When,  however,  the 
United  States,  after  having  passed  the  Non-intercourse  Act, 
proceeded  still  further  in  the  way  of  preparation  for  open 
hostilities,  the  merchants  began  to  speak  their  mind  on  the 
subject;  and  from  London,  Hull,  Bristol,  and  all  the  chief 
ports  petitions  came  to  the  legislature  praying  for  the  revoca¬ 
tion  of  the  obnoxious  orders.  The  merchants  of  London 
represented  that  trade  was  in  a  miserable  condition,  chiefly 
from  the  want  of  the  customary  intercourse  with  the  conti¬ 
nent  of  Europe ;  that  employment  was  very  scarce,  and  the 
wages  of  labor  very  low ;  that  the  aspect  of  affairs  threatened 
additional  suffering  to  those  then  experienced;  that  since  all 
the  evils  then  suffered  were  owing  to  the  continuance  of  the 
war,  it  was  all-important  to  obtain  if  possible  an  early  res¬ 
toration  of  the  blessings  of  peace ;  that  it  was  not  from  any 
dread  of  the  enemy  that  they  made  such  a  request,  but  from 
a  desire  that  no  opportunity  might  be  lost  of  entering  into 
negotiations  for  the  purpose ;  that  in  their  opinion  it  was  a 
great  error  to  suppose  that  the  policy  of  the  orders  of  the 


122 


ECONOMIC  HISTORY. 


council  could  in  any  way  be  beneficial  to  trade ;  but  that,  on 
the  contrary,  they  regarded  with  extreme  apprehension  its 
effect  on  our  relations  with  the  United  States  of  America. 
The  merchants  of  Hull  complained  that  the  system  of  license 
sapped  public  morals;  those  of  Bristol  represented  that  they 
suffered  intensely  in  their  general  trade ;  and  riots  occurred 
in  Lancashire,  Yorkshire,  and  Cheshire. 

On  April  28,  1812,  the  House  of  Commons  agreed  without 
a  division  to  hear  evidence  in  support  of  these  petitions ;  and 
on  June  16  Mr.,  afterwards  Lord,  Brougham  moved  “That 
an  humble  address  be  presented  to  his  Royal  Highness  the 
Prince  Regent,  representing  to  his  Royal  Highness  that  this 
House  has  for  some  time  past  been  engaged  in  an  inquiry 
into  the  present  depressed  state  of  the  manufactures  and 
commerce  of  the  country,  and  the  effects  of  the  orders  in 
council  issued  by  his  Majesty  in  the  years  180T  and  1809 ; 
assuring  his  Royal  Highness  that  this  House  will  at  all  times 
support  his  Royal  Highness  to  the  utmost  of  its  powers,  in 
maintaining  those  just  maritime  rights  which  have  essen¬ 
tially  contributed  to  the  prosperity  and  honor  of  the  realm; 
but  beseeching  his  Royal  Highness  that  he  would  be  graciously 
pleased  to  recall  or  suspend  the  said  orders,  and  to  adopt  such 
measures  as  may  tend  to  conciliate  neutral  powers  without 
sacrificing  the  right  and  dignity  of  his  Majesty’s  crown.”  In 
the  most  graphic  manner  Lord  Brougham  depicted  the  dis¬ 
tress  of  the  country,  showed  how  erroneous  was  the  idea  that 
what  we  lost  in  the  European  trade  we  gained  in  any  other 
quarter,  and  warned  the  country  of  the  certainty  of  a  war  with 
America  if  the  orders  were  not  at  once  rescinded.  “ I  know,” 
he  said,  “  I  shall  be  asked  whether  I  would  recommend  any 
sacrifice  for  the  mere  purpose  of  conciliating  America.  I  rec¬ 
ommend  no  sacrifice  of  honor  for  that  or  for  any  purpose ;  but 
I  will  tell  you  that  I  think  we  can  well  and  safely  for  our 
honor  afford  to  conciliate  America.  Never  did  we  stand  so 
high  since  we  were  a  nation  in  point  of  military  character. 
We  have  it  in  abundance  and  even  to  spare.  This  unhappy 
and  seemingly  interminable  war,  lavish  as  it  has  been  in 
treasure,  still  more  profuse  of  blood  and  barren  of  real  ad- 


THE  ORDERS  IN  COUNCIL . 


123 


y 

vantage,  has  at  least  been  equally  lavish  of  glory.  Its  feats 
have  not  merely  sustained  the  warlike  fame  of  the  nation, 
which  would  have  been  much ;  they  have  done  what  seemed 
scarcely  possible,  —  they  have  greatly  exalted  it.  They  have 
covered  our  arms  with  immortal  renown.  Then,  I  say,  use 
this  glory,  — use  this  proud  height  on  which  we  now  stand, 
for  the  purpose  of  peace  and  conciliation  with  America.  Let 
this  and  its  incalculable  benefits  be  the  advantage  which  we 
reap  from  the  war  in  Europe,  for  the  fame,  of  that  war  enables 
us  safely  to  take  it.  And  who,  I  demand,  give  the  most  dis¬ 
graceful  counsels,  —  they  who  tell  you  we  are  in  military  char¬ 
acter  but  of  yesterday,  we  yet  have  a  name  to  win,  we  stand 
on  doubtful  ground,  we  dare  not  do  as  we  list  for  fear  of  be¬ 
ing  thought  afraid,  we  cannot  without  loss  of  name  stoop  to 
pacify  our  American  kinsmen  ?  or  I,  who  say  we  are  a  great, 
a  proud,  a  warlike  people ;  we  have  fought  everywhere  and 
conquered  wherever  we  have  fought;  our  character  is  eter¬ 
nally  fixed ;  it  stands  too  firm  to  be  shaken,  and  on  the  faith 
of  it  we  may  do  towards  America  safely  for  our  honor  that 
which  we  know  our  interests  require  ?  This  perpetual  jeal¬ 
ousy  of  America !  Good  God !  I  cannot  with  temper  ask  on 
what  it  rests!  It  drives  me  to  a  passion  to  think  of  it! 
Jealousy  of  America!  I  should  as  soon  think  of  being  jeal¬ 
ous  of  the  tradesman  who  supplies  me  with  necessaries,  or 
the  client  who  entrusts  his  suits  to  my  patronage.  Jealousy 
of  America !  whose  armies  are  as  yet  at  the  plough,  or  mak¬ 
ing,  since  your  policy  has  willed  it,  so  awkward  (though  im¬ 
proving)  attempts  at  the  loom ;  whose  assembled  navies  could 
not  lay  siege  to  an  English  harbor!  Jealousy  of  a  power 
which  is  necessarily  peaceful  as  well  as  weak,  but  which  if 
it  had  all  the  ambition  of  France  and  her  armies  to  back  it, 
and  all  the  navy  of  England  to  boot, —  nay,  had  it  the  lust  of 
conquest  which  marks  your  enemies,  and  your  own  army  as 
well  as  navy  to  gratify  it,  —  is  placed  at  so  vast  a  distance  as 
to  be  perfectly  harmless !  And  this  is  the  nation  of  which 
for  our  honor’s  sake  we  are  desired  to  cherish  a  perpetual 
jealousy  for  the  ruin  of  our  best  interests !  I  trust,  sir,  that 
no  such  phantom  of  the  brain  will  scare  us  from  the  path  of 


124 


ECONOMIC  HISTORY . 


our  duty.  The  advice  which  I  tender  is  not  the  same  which 
has  at  all  times  been  offered  to  this  country.  There  is  one 
memorable  era  in  our  history  when  other  uses  were  made  of 
our  triumphs  from  those  which  I  recommend.  By  the  treaty 
of  Utrecht,  which  the  reprobation  of  ages  has  left  inade¬ 
quately  censured,  we  were  content  to  obtain,  as  the  whole 
price  of  Ramillies  and  Blenheim,  an  additional  share  of  the 
accursed  slave  trade.  I  give  you  other  counsels.  I  should 
have  you  employ  the  glory  which  you  have  won  at  Talavera 
and  Corunna  ih  restoring  your  commerce  to  its  lawful,  open, 
honest  course,  and  rescue  it  from  the  mean  and  hateful 
channels  in  which  it  has  lately  been  confined.  And  if 
any  thoughtless  boaster  in  America  or  elsewhere  should 
vaunt  that  you  have  yielded  through  fear,  I  would  not  bid 
him  wait  until  some  new  achievement  of  our  arms  put  him 
to  silence,  but  I  would  counsel  you  in  silence  to  disregard 
him.” 

The  effect  of  such  an  appeal  was  fatal  to  the  whole  system. 
The  government  saw  that  resistance  was  no  longer  possible, 
and  on  April  21  the  Prince  Regent  made  a  declaration  that 
the  orders  in  council  would  be  revoked  as  soon  as  the  Berlin 
and  Milan  decrees  should  be  repealed.  But  it  was  too  late. 
America  had  by  this  time  ceased  to  maintain  a  neutral  atti¬ 
tude.  And  having  made  a  secret  treaty  with  Napoleon,  she 
issued  an  embargo  on  all  British  vessels  in  American  ports, 
declared  war  against  England,  and  proceeded  to  make  an  in¬ 
effectual  attack  upon  Canada.  The  political  condition  of 
Europe,  however,  at  this  stage  happily  assumed  a  brighter 
aspect.  The  long-desired  peace  began  to  dawn  on  the  hori¬ 
zon,  and  in  rapid  succession  the  news  came  of  the  battle  of 
Leipzig,  the  entry  of  the  Allies  into  Paris,  and  the  abdication 
of  Bonaparte.  Negotiations  then  commenced  in  earnest,  and 
they  issued  in  the  treaty  of  peace  and  Congress  of  Vienna, 
which  once  more  restored  order  and  symmetry  in  the  politi¬ 
cal  organization  of  Europe.1  On  Dec.  24,  1814,  a  treaty  of 

1  The  total  cost  of  the  war  with  France,  from  1793  to  1815  (the  war  expen¬ 
diture  continued  till  1817),  was  £831,446,449.  The  national  debt,  which,  in 
1793,  amounted  to  £247,874,434,  rose  in  1815  to  £861,039,049. 


THE  ORDERS  IN  COUNCIL . 


125 


peace  was  signed  between  the  United  Kingdom  and  the 
United  States.  On  June  9,  1815, 1  the  principal  act  of  the 
Congress  of  Vienna  was  signed,  which  established  the  future 
political  relations  of  the  European  States,  and  laid  down  the 
regulations  for  the  free  navigation  of  rivers.  And  on  July 
27  of  the  same  year  a  Treaty  of  Commerce  was  concluded 
between  Great  Britain  and  the  United  States  of  America. 

1  The  treaties  of  Vienna  had  to  deal  with  the  financial  as  well  as  with  the 
political  condition  of  States.  By  agreement  dated  August  10,  1815,  France  be¬ 
came  bound  to  pay  185,840,130f.  to  the  Allied  Powers  for  the  maintenance  of 
the  1,135,000  men,  the  army  of  occupation.  And  by  the  treaty  of  November 
15,  France  undertook  to  pay  700,000,000f.  to  the  Allied  Powers  as  war  contribu¬ 
tion,  to  pay  all  legitimate  debts,  and  also  the  expense  of  occupation  of  150,000 
men  for  five  years.  Numerous  claims  were,  moreover,  made  by  the  Banks  of 
Hamburg,  Amsterdam,  Genoa,  the  Swiss  bankers,  and  many  merchants  for 
losses  and  destruction  of  their  property,  amounting  in  all  to  2,700,000,000f.,  and 
all  these  claims  were  settled  by  means  of  loans  contracted  with  the  banking 
houses  of  Baring  and  Hope. 


126 


ECONOMIC  HISTORY . 


VI. 


THE  FINANCES  OF  ENGLAND,  1793-1815. 

From  Porter’s  Progress  of  the  Nation,1  Section  IY. 

CHAPTER  I. 

TN  order  to  give  an  intelligible  account  of  the  financial 
state  of  the  kingdom  at  The  beginning  of  the  present 
century,  it  is  necessary  to  explain  briefly  the  system  which 
had  been  brought  into  operation  by  Mr.  Pitt  during  the  pre¬ 
ceding  three  years. 

In  November,  1797,  that  minister  had  recourse  to  what  he 
was  pleased  to  call  “a  perfectly  new  and  solid  system  of 
finance.”  The  public  expenditure  of  that  year  amounted  to 
twenty-five  and  a  half  millions,  of  which  sum  only  six  and  a 
half  millions  were  provided  for  by  existing  unmortgaged 
taxes,  leaving  nineteen  millions  to  be  raised  by  extraordinary 
means.  In  the  then  condition  of  the  money  market  it  was 
felt  to  be  impossible  to  borrow  such  an  amount  in  the  ordi¬ 
nary  manner,  that  is,  providing  by  new  taxes  for  the  pay¬ 
ment  of  only  the  permanent  annual  burden  occasioned  by 
the  increased  debt;  and  a  new  impost,  calculated  to  produce 
seven  millions,  was  sanctioned  by  parliament,  which  impost 
was  to  be  continued  until  it  should  in  conjunction  with  the 
produce  of  the  sinking-fund,  repay  the  twelve  millions  that 
would  be  still  deficient.  This  new  system  of  finance  might 
have  been  entitled  to  the  character  given  of  it  by  Mr.  Pitt,  if 
it  had  not  been  probable, —  nay,  certain,  that  in  the  follow¬ 
ing  years  an  equal  expenditure  must  be  met  by  similar  means, 
until  the  seven  millions  would  prove  inadequate  even  for  the 
payment  of  the  annual  interest  of  the  sums  for  which  the  tax 


1  London:  John  Murray,  1851. 


FINANCES  OF  ENGLAND. 


127 


was  imposed,  when  it  would  become  part  of  the  permanent 
burdens  of  the  country.  This  new  impost,  to  which  the 
name  of  “  triple  assessment  ”  was  given,  was  in  fact  an  addi¬ 
tion  made  to  the  assessed  taxes,  “  in  a  triplicate  proportion 
to  their  previous  amount, —  limited,  however,  to  the  tenth  of 
each  person’s  income.” 

The  adoption  of  this  or  some  similar  plan  of  financial 
arrangement  was  hardly  a  matter  of  choice  with  the  minister 
by  whom  the  funding  system,  as  ordinarily  practised,  could 
not  have  been  any  further  pursued  at  that  time.  Unfortu¬ 
nately  for  the  success  of  the  principle  which  it  was  thus 
sought  to  establish,  the  mode  in  which  it  was  proposed  to 
raise  the  seven  millions  of  additional  revenue  was  highly 
unpopular;  and  indeed  it  has  always  excited  dissatisfaction 
on  the  part  of  the  public  to  be  called  on  for  the  payment  of 
any  tax  from  which  they  have  not  the  power  to  protect  them¬ 
selves  by  abstaining  from  the  use  of  the  taxed  commodity. 
It  is  this  consideration  which  has  always  made  our  finance 
ministers  prefer  indirect  to  direct  taxation,  and  which  led, 
during  the  progress  of  a  long  and  expensive  war,  to  the  im¬ 
position  of  duties  that  weighed  with  destructive  force  upon 
the  springs  of  industry.  The  financial  difficulties  by  which 
the  government  was  then  embarrassed  may  be  known  from  the 
fact  that  a  loan  of  three  millions  was  raised  in  April,  1798, 
at  the  rate  of  <£200  three  per  cent  stock,  and  5s.  long  an¬ 
nuity  for  each  £100  borrowed,  being  at  the  rate  of  six  and  a 
quarter  per  cent,  and  that  the  “triple  assessment,”  which 
was  calculated  to  produce  seven  millions  yielded  no  more 
than  four  and  a  half  millions.  In  the  following  December 
the  triple  assessment  was  repealed,  and  in  lieu  of  it  an  in¬ 
come-tax  was  imposed  at  the  rate  of  ten  per  cent  upon  all 
incomes  amounting  to  £200  and  upwards,  with  diminishing 
rates  upon  smaller  incomes,  down  to  sixty  pounds  per  annum, 
below  which  rate  the  tax  was  not  to  apply.  This  tax  was 
estimated  to  produce  ten  millions :  it  was  called  a  war  tax ; 
but  when  the  minister  proceeded  to  mortgage  its  produce  to 
defray  the  interest  of  loans  to  a  large  amount  such  a  name 
appeared  to  be  little  better  than  a  delusion.  Like  the  triple 


128 


ECONOMIC  HISTORY. 


assessment,  the  produce  of  the  income-tax  fell  greatly  short 
of  its  estimated  amount  and  yielded  no  more  than  seven 
millions,  a  large  part  of  which  was  quickly  absorbed  to  de¬ 
fray  the  interest  of  loans  for  which  it  was  successively 
pledged.  In  1801,  after  deducting  the  sums  thus  chargeable 
on  it,  this  tax  produced  only  four  millions  towards  the  na¬ 
tional  expenditure.  In  proposing  a  loan  of  twenty-five  and 
a  half  millions  for  the  service  of  that  year,  it  was  considered 
inexpedient  to  mortgage  the  income-tax  any  further,  and 
new  taxes  were  imposed  estimated  to  yield  XI,  800, 000  per 
annum.  In  March,  1802,  peace  was  made  with  France,  and 
in  the  same  month  notice  was  given  by  the  Chancellor  of  the 
Exchequer,  Mr.  Addington,  of  his  intention  to  repeal  the 
income-tax,  which  was  felt  to  be  highly  oppressive,  and  had 
become  more  and  more  odious  to  the  people.  In  effecting 
this  repeal,  and  at  the  same  time  to  keep  faith  with  the  pub¬ 
lic  creditors  to  whom  its  produce  had  been  mortgaged  to  the 
extent  of  fifty-six  and  a  half  millions  of  three  per  cent  stock, 
additional  taxes  were  imposed  upon  beer,  malt,  and  hops, 
and  a  considerable  increase  was  made  to  the  assessed  taxes ; 
besides  which  an  addition  under  the  name  of  a  modification 
was  made  to  the  tax  on  imports  and  exports  previously  known 
under  the  name  of  the  convoy  duty. 

At  this  time  the  aggregate  amount  of  permanent  taxes 
was  thirty-eight  and  a  half  millions,  exactly  double  what  it 
had  been  at  the  breaking  out  of  the  war  in  1798.  During 
those  nine  years  taxes  to  the  amount  of  X  280, 000, 000  ex¬ 
clusive  of  the  cost  of  collection  had  been  levied  from  the  peo¬ 
ple  ;  and  a  few  words  are  necessary  in  order  to  account  for  the 
seeming  contradiction  implied  in  the  fact  that,  notwithstand¬ 
ing  this  ruinous  rate  of  expenditure,  many  of  the  great  inter¬ 
ests  throughout  the  country  wore  the  outward  appearance  of 
prosperity.  A  nation  engaged  in  an  expensive  war,  which 
calls  for  the  systematic  expenditure  of  large  sums  beyond  its 
income  may  be  likened  to  an  individual  spendthrift  during 
his  career  of  riot  and  extravagance;  all  about  him  wears 
the  aspect  of  plenty  and  prosperity,  and  this  appearance  will 
continue  until  his  means  begin  to  fail,  and  those  who  have 


FINANCES  OF  ENGLAND. 


129 


fattened  upon  his  profusion  are  at  length  sent  away  empty. 
The  enormous  expenditure  of  the  government  joined  to  the 
state  of  the  currency  (as  already  explained)  necessarily  caused 
a  general  and  great  rise  of  prices ;  as  regarded  agricultural 
produce,  this  effect  was  exaggerated  by  the  ungenial  nature  of 
the  seasons.  Rents  had  risen  throughout  the  country  in  a  far 
greater  degree  than  the  necessary  expenditure  of  the  land- 
owners,  who  thence  found  their  situations  improved,  notwith¬ 
standing  the  additional  load  of  taxation.  The  great  number 
of  contractors  and  other  persons  dealing  with  the  government 
had  derived  a  positive  benefit  from  the  public  expenditure, 
and  being  chiefly  resident  at  the  seat  of  government,  they 
were  enabled  greatly  to  influence  the  tone  of  public  opinion. 
The  greater  command  of  money  thus  given  to  considerable 
classes  occasioned  an  increased  demand  for  luxuries  of  for¬ 
eign  and  domestic  production,  from  which  the  merchants  and 
dealers  derived  advantage.  There  were  besides  other  classes 
of  persons  who  profited  from  the  war  expenditure.  These 
were  the  producers  of  manufactured  goods  and  those  who/ 
dealt  in  them,  and  who  found  their  dealings  greatly  in¬ 
creased  by  means  of  the  foreign  expenditure  of  the  govern¬ 
ment  in  subsidies  and  expeditions,  the  means  for#  which  were 
furnished  through  those  dealings ;  the  manufacturers  were  at 
the  same  time  beginning  to  reap  the  advantages  that  have 
since  been  experienced  in  a  more  considerable  degree  from 
the  series  of  inventions  begun  by  Hargreaves  and  Arkwright, 
and  which  acted  in  some  degree  as  palliatives  to  the  evil 
effects  of  the  government  profusion. 

As  in  the  case  of  the  spendthrift,  while  all  these  causes 
were  in  operation  there  was  an  appearance  of  prosperity,  and 
those  who  were  profiting  from  this  state  of  things  were  anx¬ 
ious  to  keep  up  the  delusion.  That  it  was  no  more  than  delu¬ 
sion  will  be  at  once  apparent  to  all  who  examine  below  the 
surface,  and  who  inquire  as  to  the  condition  of  poverty  and 
wretchedness  into  which  the  great  mass  of  the  people  were 
then  plunged.  In  some  few  cases  there  had  been  an  advance 
of  wages;  but  this  occurred  only  to  skilled  artisans,  and 

even  with  them  the  rise  was  wholly  incommensurate  with  the 

9 


130 


ECONOMIC  HISTORY. 


increased  cost  of  all  the  necessaries  of  life.  The  mere  laborer 
—  he  who  had  nothing  to  bring  to  market  but  his  limbs  and 
sinews —  did  not  participate  in  this  partial  compensation 
for  high  prices,  but  was  in  most  cases  an  eager  competitor 
for  employment  at  the  same  or  nearly  the  same  wages  as  had 
been  given  before  the  war.  Nor  could  it  well  be  otherwise, 
since  the  demand  for  labor  can  only  increase  with  the  in¬ 
crease  of  the  capital  destined  for  the  payment  of  wages ;  and 
we  have  seen  that  capital,  so  far  from  being  suffered  to 
accumulate,  Was  dissipated  by  the  government  expenditure 
more  rapidly  than  it  could  be  accumulated  by  individuals. 
In  London  and  its  vicinity  the  rates  of  wages  are  necessarily 
higher  because  of  the  greater  expense  of  living  than  in  coun¬ 
try  districts ;  and  it  is  asserted  from  personal  knowledge  of 
the  fact  that  at  the  time  in  question  there  was  a  superabund¬ 
ant  supply  of  laborers  constantly  competing  for  employment 
at  the  large  government  establishments,  where  the  weekly 
wages  did  not  exceed  15s.,  while  the  price  of  the  quartern 
loaf  was  Is.  10 d.,  and  the  other  necessary  outgoings  of  a 
laborer’s  family  were  nearly  as  high  in  proportion.  If  we 
contrast  the  weekly  wages  at  the  two  periods  of  1790  and 
1800,  of  husbandry  laborers  and  of  skilled  artisans,  measur¬ 
ing  them  both  by  the  quantity  of  wheat  which  they  could 
command,  it  will  be  seen  that  the  former  could  in  1790  pur¬ 
chase  eighty-two  pints  of  wheat,  and  in  1800  could  procure 
no  more  than  fifty-three  pints,  while  the  skilled  artisan,  who 
in  1790  could  buy  one  hundred  and  sixty  nine  pints,  could 
procure  in  1800  only  eighty-three  pints.  To  talk  of  the  pros¬ 
perous  state  of  the  country  under  such  a  condition  of  things 
involves  a  palpable  contradiction.  It  would  be  more  correct 
to  liken  the  situation  of  the  community  to  that  of  the  inhabi¬ 
tants  of  a  town  subjected  to  a  general  conflagration,  in  which 
some  became  suddenly  enriched  by  carrying  off  the  valuables, 
while  the  mass  were  involved  in  ruin  and  destitution. 

It  may  be  objected  to  the  view  here  taken,  but  which  is 
founded  upon  facts  that  hardly  admit  of  controversy,  that 
had  the  condition  of  the  country  been  such  as  is  represented, 
we  must  have  sunk  under  the  greater  efforts  we  were  so  soon 


FINANCES  OF  ENGLAND. 


131 


after  called  on  to  sustain ;  and  there  is  every  reason  to  be¬ 
lieve  that  but  for  the  invention  of  the  spinning- jenny  and  the 
improvements  in  the  steam-engine,  which  have  produced  such 
almost  magical  effects  upon  the  productive  energies  of  this 
kingdom,  it  would  have  been  impossible  to  have  withstood 
the  combination  with  which  single-handed  we  were  called 
upon  to  contend.  The  manner  and  degree  in  which  these 
powerful  agents  have  enabled  us  to  withstand  and  to  triumph 
over  difficulties  unparalleled  in  the  history  of  the  world  have 
been  shown  in  a  preceding  section  of  this  inquiry. 


CHAPTER  II. 

The  public  expenditure  of  England  during  the  war  which 
was  begun  in  1793  and  continued  (with  short  intermissions 
in  1801  and  1814)  until  the  final  overthrow  of  Napoleon  in 
1815,  was  conducted  throughout  upon  a  truly  gigantic  scale. 
In  1792,  the  last  year  of  peace,  the  entire  public  expenditure 
of  the  kingdom  was  <£19,859,123,  which  sum  included 
£9,767,333  interest  upon  the  public  debt.  In  1814  the  cur¬ 
rent  expenditure  amounted  to  £76,780,895,  and  the  interest 
upon  the  debt  to  £30,051,365  making  an  aggregate  sum  of 
£106,832,260  paid  out  of  the  public  exchequer  for  the  dis¬ 
bursements  of  that  one  year.  This  is  the  largest  annual 
outlay  ever  made ;  that  of  the  previous  year  was  within  one 
million  of  the  same  amount. 

It  is  hardly  possible  to  conceive  that  the  public  expendi¬ 
ture  could  have  been  long  continued  upon  this  scale  of  mag¬ 
nitude.  The  state  of  exhaustion  under  which  the  country 
was  made  to  suffer,  during  the  first  few  years  of  the  peace 
that  followed,  sufficiently  attests  the  truth  of  this  opinion. 
The  financial  efforts  of  the  government  had  been  made  for 
several  preceding  years  with  a  degree  of  lavish  profusion 
that  was  continually  augmented  until  it  reached  the  height 
above  mentioned;  the  expenditure,  including  interest  upon 
the  debt,  during  the  ten  years  from  1806  to  1815  inclusive, 
averaged  £84,067,761  per  annum,  sums  which,  until  the 


132 


ECONOMIC  HISTORY. 


years  in  which  they  were  actually  expended  it  would  have 
been  considered  wholly  chimerical  to  expect  to  raise.  The 
experience  of  that  period  has  shown  how  impossible  a  thing 
it  is  ta  judge  correctly  from  the  past  as  to  the  growing  re¬ 
sources  of  our  country,  or  it  might  be  confidently  affirmed 
that  during  the  concluding  years  of  this  series  we  had 
assuredly  reached  the  limit  of  possibility.  Without  that 
experience  for  their  guidance,  our  ancestors,  in  former  but 
not  very  remote  times,  gave  way  to  gloomy  forebodings  as  to 
their  future  prospects,  at  which  we  cannot  but  smile  when 
thinking  of  the  comparatively  pygmy  efforts  which  called 
them  forth.  Some  of  those  forebodings  have  been  recorded 
by  Sir  John  Sinclair  in  his  work  on  the  public  revenue  of 
this  kingdom.  A  few  passages  upon  the  subject  taken  from 
that  work,  and  with  the  dates  at  which  they  were  written, 
may  not  be  without  interest  to  the  reader  at  the  present 
moment. 

1736.  “The  vast  load  of  debt  under  which  the  nation  still 
groans  is  the  true  source  of  all  those  calamities  and  gloomy  prospects 
of  which  we  have  so  much  reason  to  complain.  To  this  has  been 
owing  that  multiplicity  of  burdensome  taxes  which  have  more  than 
doubled  the  price  of  the  common  necessaries  of  life  within  a  few 
years  past,  and  thereby  distressed  the  poor  laborer  and  manufac¬ 
turer,  disabled  the  farmer  to  pay  his  rent,  and  put  even  gentlemen 
of  plentiful  estates  under  the  greatest  difficulties  to  make  a  toler¬ 
able  provision  for  their  families.”  1 

At  the  time  this  gloomy  picture  was  drawn  the  public  debt 
did  not  exceed  £50,000,000,  and  the  annual  charge  on  that 
account  was  somewhat  under  £2,000,000,  being  considerably 
below  the  sums  added  to  the  public  burdens  in  the  single 
year  1814. 

1749.  “Our  parliamentary  aids,  from  the  year  1740,  exclu¬ 
sively,  to  the  year  1748,  inclusively,  amount  to  £55,522,159  16s. 
3d.,  a  sum  that  will  appear  incredible  to  future  generations,  and  is 
so  almost  to  the  present.  Till  we  have  paid  a  good  part  of  our 
debt,  and  restored  our  country  in  some  measure  to  her  former 

1  The  Craftsman,  No.  502, 14th  February,  1736. 


FINANCES  OF  ENGLAND. 


133 


wealth  and  power,  it  will  be  difficult  to  maintain  the  dignity  of 
Great  Britain,  to  make  her  respected  abroad,  and  secure  from 
injuries  or  even  affronts  on  the  part  of  her  neighbors.  ”  1 

The  debt,  to  the  effects  of  which  so  much  evil  is  here  at¬ 
tributed,  was  still  under  £  80, 000, 000,  and  the  annual  inter¬ 
est  scarcely  more  than  <£3,000,000. 

1756.  “It  has  been  a  generally  received  notion  among  political 
arithmeticians,  that  we  may  increase  our  debt  to  £100,000,000, 
but  they  acknowledge  that  it  must  then  cease,  by  the  debtor 
becoming  bankrupt.”2 

In  the  few  years  that  preceded  the  publication  of  Mr. 
Hannay’s  letters  the  debt  had  been  somewhat  diminished, 
so  that  it  amounted  to  about  £75,000,000,  and  the  annual 
charge  on  the  country  to  £2,400,000. 

1761.  “The  first  instance  of  a  debt  contracted  upon  parliamen¬ 
tary  security  occurs  in  the  reign  of  Henry  VI.  The  commence¬ 
ment  of  this  pernicious  practice  deserves  to  be  noted,  —  a  practice 
the  more  likely  to  become  pernicious  the  more  a  nation  advances  in 
opulence  and  credit.  The  ruinous  effects  of  it  are  now  become 
apparent,  and  threaten  the  very  existence  of  the  nation.”  a 

The  public  burdens  had  by  this  time  so  far  exceeded  the 
possible  limit  assigned  by  Mr.  Hannay,  that  the  debt 
amounted  to  nearly  £150,000,000,  and  the  annual  interest 
to  £4,800,000.  The  amount  was  somewhat  reduced  between 
that  period  and  the  breaking  out  of  the  American  war,  when 
a  succession  of  loans  again  became  necessary.  On  winding 
up  the  accounts  of  that  contest,  the  debt  amounted  to 
£268,000,000,  and  the  annual  charge  to  £9,500,000.  On 
the  5th  of  January,  1793,  just  before  the  beginning  of  the 
war  of  the  French  Revolution,  the  debt  continued  nearly  the 
same  as  at  the  beginning  of  the  peace  (the  exact  amount  of 
funded  and  unfunded  debt,  including  the  value  of  terminable 

1  Some  Reflections  on  the  Present  State  of  the  Nation,  by  Henry  St.  John, 
Lord  Bolingbroke. 

2  Letters  by  Samuel  Hannay,  Esq. 

8  Hume’s  History  of  England,  8vo  edition,  1778,  vol.  iii.  p.  215. 


134 


ECONOMIC  HISTORY , 


ABSTRACT  OF  PUBLIC  INCOME  AND  EXPENDITURE  IN  THE  UNITED  KINGDOM 

IN  EACH  YEAR,  FROM  1792  TO  1849. 


Income. 


Expenditure 


Years. 


1792. 

1793. 
1794 

1795. 

1796. 

1797. 

1798. 

1799. 

1800. 
1801. 
1802. 

1803. 

1804. 

1805. 

1806. 

1807. 

1808. 

1809. 

1810. 
1811. 
1812. 
1813 

1814. 

1815. 

1816. 

1817. 

1818. 
1819 
1820. 
1821. 
1822 
1823 
1824. 

1825 

1826 
1827. 
1S28. 
1829 
1830. 
1831 
1832. 
1833 
1834. 
1835 

1836. 

1837. 

1838. 

1839. 

1840. 

1841 

1842 

1843. 

1844. 

1845. 

1846. 

1847. 

1848 

1849 


£19,258,814 

19.845.705 
20,193,074 
19,883,520 
21,454,728 
23,126,940 
31,035,363 
35,602,444 
34,145,584 
34,113,146 
36,368,149 
38,609,392 
46,176,492 

50.897.706 
55,796,086 
59,339,321 

62.998.191 
63,719,400 
67,144,542 

65.173.545 
65,037,850 
68,748,363 
71,134,503 
72,210,512 

62.264.546 
52,055,913 
53,747,795 
52,648,847 
54,282,958 

55.834.192 
55,663,650 
57,672,999 
59,362,403 
57,273.869 
54,894,989 
54,932,518 
55,187,142 
50,786,682 
50,056,616 
46,424,440 
46,988,755 
46,271,326 
46,425.263 
45,893,369 
48,591.180 
46,475,194 
47,333,460 
47,844,899 
47,567,565 
48,084,360 
46,965,631 
62.582,817 
54,003,754 
53,060,354 
53.790,138 
61,546,265 
53,388,717 
52,951,749 


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a  © 
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a 


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a 

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0)  n-O 
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-P  O  (H 
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H  Jj  *3 

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a  ns  a 

S3  &  o3  . 


4,877,956 

6,998,389 

30,464,831 

22,244,982 

30,356,873 

16,858,503 

21,714,863 

23,030,529 

27,305,271 

14.638,254 

8,752,761 

14,570,763 

16,849,801 

13,035,344 

10,432,934 

12,095,044 

12,298,379 

7,792,444 

19,143,953 

24,790,697 

39,649,282 

34,563,603 

20,241,807 

514,059 


333,989 


853,037 

1,614,359 


7,476,353 

1,593,945 

374,568 


,ta 

OQ 

1 


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4> 
OQ 

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P.2 
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£19,258,814 

24.723.661 
27,191,463 
50,348,351 
43,699,710 
53,483,813 
47,893,866 
57,317,307 
57,176,113 
61,418,417 
51,006,403 
47,362,153 

60.747.255 
67,747,507 
71,831,430 

69.772.255 
75,093,235 
76,017,779 
74,936,986 
84,317,498 
89,828,547 

108,397.645 

105,698,106 

92,452,319 

62,778,605 

52,055,913 

53,747,795 

52,648,847 

54,282,958 

55,834,192 

55,663,650 

57,672,999 

59,362,403 

57,273,869 

54,894,989 

54,932,518 

55,187,142 

50,786,682 

50,056,616 

46,424,440 

47,322,744 

'  46,271,326 
46,425,263 
45,893,369 
48,591,180 
46,475,194 
47,333,460 
47,844,899; 
47,567,565 
48,937 ,397 1 
48,580,026 
52,582,817 
54,003,754 
53,060.^54 
53,790,138 
59,022.617 

54.982.662 
53,326,317 


5  53 
^rs 
P  iS 

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CO  ©  ^ 

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£9,767,333 
9,437,862 
9,890,904 
10,810,728 
11,841,204 
14,270,616 
17,585,518 
17,220,983 
17,381,561 
19,945,624 
19.855,588 
20,699,864 
20,726,772 
22,141,426 
23,000,006 
23,362,685 
23,158,982 
24,213,867 
24,246,946 
24,977,915 
25,546,508 
28, 030, 239 
30,051,365 
31,576,074 

32.938.751 
31,436,245 
30,880,244 
30,807,249 

31.157.846 
31,955,304 
29,921,493 
29,215,905 
29,066,350 
28,060,287 
28,076,957 

28.239.847 
28,095,506 
29,155,612 
29,118,858 
28,341,416 

28.323.751 
28,522,507 
28,504,096 
28,514,610 
29,243,598 
29,489.571 
29  260,238 
29,454,062 
29,381,718 
29,450,145 
29,428,120 
29,269,160 
30,495,459 
28,253,872! 
28,077,987 
28,141,531: 
28,563,517 
28,323,961 


£2,421,681 


1,826,814 

1,624,606 

3,163,130 

1,918,019 

4,104,457 

2,962,564 

5.261.725 
6,456,559 

9.900.725 
1,195,531 
2,023,028 
4,667,965 
2,760,003 
1,935,465 
2,673,858 

5,696 

1,023,784 

1,776,378 

1,270,050 

1,590,727 

1,985,885 

7,496 


8,016 


8,741 

1,563,361 

4,143,891 


21,074 


£7,670,109 

14,769,208 

17,851,213 

37.603.449 
30,334,087 
36,469,993 

33.541.727 
38,403,421 
39,439,706 
41,383,555 

29.693.619 
28,298,366 
38,649,436 
45,027,892 
45,941,205 
44,250,357 

49.984.105 
52,352,146 
52,618,602 
58,757,308 
63,210,816 
77,913,488 
76,780,895 

60.704.106 
32,231,020 
22,018,179 

20.843.728 
21,436,130 

21.381.382 
21,070,825 
20,826,567 
21,746,110 
23,708,252 
23,559,741 
25,808,585 
25,560,446 
21,407,670 
19,919.522 
18,024,085 
18.781,882 
18,050,245 
16,235,735 
16,397,605 
15,884,649 
17,258,871 

17.641.383 

18.418.449 
19,903,629 
19,779,818 
20,735,584 
21,517,049 
21,870,353 
20,152,189 
20,988,840 
22,865,843 
26,361,416 

25.621.619 
22,529,661 


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2  p 
2  ® 

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§  *  § 


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£19,859,123 

24,197,070 

27,742,117 

48,414,177 

42,175,291 

50,740,609 

51,127,245 

55,624,404 

56,821,267 

61.329.179 

49.549.207 
48,998,230 

59.376.208 
67,169,318 
68,941,211 
67,613,042 
73,143,087 
76,566,013 
76,865,548 
83,735,223 
88,757,324 

105,943,727 

106,832,260 

92.280.180 
65,169,771 
55.281,238 
53j348.578 
55,406,509 
54,457,247 
57,130,586 
53,710,624 
56.223,740 
59,231,161 
61,520,753 
55,081,073 
55,823,321 
54,171,141 
51,835,137 
49,078,108 
49,797,156 
46,379,692 
45,782,026 
46,678,079 
45,669.309 
48,093,196 
49,116,839 
47,686,183 
49,357,691 
49,169,552 
50,185,729 
50,945,169 
51,148,254 
52,211,009 
59,386,603 
50,943,830 
54,502,947 
54,185,136 
50,874,696 


STATEMENTS  SHOWING  THE  AMOUNT  OF  MONEY  RAISED  BY  LOANS  AND  THE  FUNDING  OF  EXCHEQUER  BILLS,  WITH  THE  AMOUNT  AND 
DESCRIPTION  OF  STOCK  CREATED,  AND  THE  ANNUAL  CHARGE  THEREON  IN  THE  YEARS  UNDERMENTIONED. 


FINANCES  OF  ENGLAND , 


135 


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136 


ECONOMIC  HISTORY. 


annuities  was  £261,735,059,  and  the  annual  charge  was 
£9,471,675).  From  that  time  to  the  peace  of  Amiens 
hardly  a  year  passed  without  witnessing  some  increase  to  the 
national. burdens,  so  that  at  midsummer,  1802,  the  capital 
of  the  funded  and  unfunded  debt  amounted  to  £637,000,000. 
On  the  5th  of  January,  1816,  the  capital  was  £885,186,323, 
and  the  annual  charge  was  £32,457,141.  The  preceding 
statements  exhibit  the  progressive  state  of  the  public  income 
and  expenditure  from  1792  to  1849,  including  the  annual 
charge  on  account  of  the  public  debt;  and  the  amount  of 
money  raised  by  loans,  and  the  funding  of  Exchequer  Bills, 
with  the  amount  and  description  of  stock  created,  and  the 
annual  charge  in  respect  of  the  same  in  each  year  from  the 
beginning  of  the  present  century. 

An  extraordinary  degree  of  delusion  is  observable  in  the 
proceedings  of  the  different  finance  ministers  by  whom  the 
support  of  the  sinking-fund  was  advocated  during  the  war. 
It  has  been  pretended  that  the  purchases  made  by  means  of 
that  fund  had  the  effect  of  keeping  up  the  market  value  of 
the  public  debt,  and  thereby  enabled  the  minister  to  con¬ 
tract  loans  upon  more  advantageous  terms  than,  without 
this  machinery,  would  have  been  possible.  It  may  well  be 
doubted,  however,  whether  the  repurchase  in  this  manner, 
from  time  to  time,  of  parts  only  of  that  surplus  portion  of 
the  public  debt  which  was  created  for  the  express  purpose  of 
such  operations,  had  any  real  effect  in  raising  the  price 
of  the  remaining  portion  of  the  public  securities;  in  other 
words,  whether  the  price  thus  factitiously  acted  upon,  of  the 
larger  amount  of  debt,  was  at  any  time  greater  than  the 
price  would  have  been  of  the  smaller  amount  of  debt  that 
would  have  existed  if  the  sinking-fund  had  not  been  created, 
the  purchases  of  the  commissioners  never  having  in  fact 
accomplished  more  than  the  repurchase  of  the  so  needlessly 
created  part  of  the  debt.  It  has  been  further  urged  in  de¬ 
fence  of  the  sinking-fund  that  the  prospect  which  it  enabled 
the  minister  to  hold  out  of  the  speedy  redemption  of  the 
whole  debt  had  the  effect  of  reconciling  the  people  to  the 
payment  of  a  larger  amount  of  taxes  than  they  would  other- 


FINANCES  OF  ENGLAND. 


13T 


wise  have  been  willing  to  pay.  Allowing  that  the  effect 
here  stated  was  produced,  we  may  still  doubt  the  wisdom  of 
that  government  which  is  obliged  to  resort  to  a  juggle  in 
order  to  reconcile  the  people  to  its  measures,  and  especially 
when,  as  in  the  case  under  examination,  the  delusion  was  so 
expensive  and  likely  to  prove  so  permanently  injurious  in  its 
nature. 

The  average  rate  at  which  three  per  cent  stock  was  cre¬ 
ated  between  1793  and  1801  was  £57  7s.  6d.  of  money  for 
<£100  stock,  and  the  average  market  price  during  that  period 
was  £61 17s.  5d.  for  £100  stock.  The  loss  to  the  public  upon 
the  additional  sum  borrowed  in  order  that  it  might  be  re¬ 
deemed  during  that  period,  which  was  £49,655,531,  amounted 
to  four  and  a  half  per  cent,  or  £2,234,500.  Between  1803 
and  the  termination  of  the  war  the  average  price  at  which 
loans  were  contracted  was  £60  7s.  6d.  per  £100  stock,  and 
the  average  market  price  during  that  time  was  £62  17s.  6d. 
per  £100.  The  loss  was,  therefore,  two  and  a  half  per  cent 
upon  the  sum  redeemed  during  that  time,  £176,173,240  or 
£4,404,331,  making  together  an  amount  of  £6,638,831  abso¬ 
lutely  lost  to  the  public  by  these  operations.  This  amount, 
reckoned  at  the  average  price  of  the  various  lo'ans,  is  equiva¬ 
lent  to  a  capital  of  more  than  eleven  millions  of  three  per 
cent  stock,  with  which  the  country  is  now  additionally  bur¬ 
dened  through  the  measure  of  borrowing  in  a  depressed 
market  more  money  than  was  wanted  in  order  to  its  being 
repaid  when  the  market  for  public  securities  was  certain  to 
be  higher.  The  fallacy  attending  this  system  is  now  so 
fully  recognized  that  it  is  not  likely  any  minister  will  in 
future  make  a  show  of  redeeming  debt  at  the  moment  when 
circumstances  compel  him  actually  to  increase  its  amount 
for  that  purpose. 

Another  error,  of  a  still  more  important  nature,  involved  in 
this  system  remains  to  be  noticed.  The  absurdity  of  borrow¬ 
ing  money  in  order  to  extinguish  debt  could  never  have  been 
seriously  adopted  but  with  the  anticipation  of  the  good  effects 
that  might  be  drawn  from  such  a  course  after  the  necessity 
for  further  borrowing  should  cease,  when  it  might  be  bench- 


138 


ECONOMIC  HISTORY. 


cial  to  apply  towards  the  redemption  of  the  debt  the  high 
scale  of  taxation  wrhich  that  system  rendered  practicable. 
There  never  could  have  existed  any  doubt  of  the  fact  that 
whenever  the  necessity  for  borrowing  should  cease  the  mar¬ 
ket  value  of  the  public  funds  would  advance  greatly,  and 
would  therefore  in  an  equal  degree  limit  the  redeeming 
power  of  the  surplus  income,  however  arising.  The  knowl¬ 
edge  of  this  fact  should  have  led  the  ministers  by  whom 
successive  additions  were  made  to  the  public  debt  to  the 
adoption  of  a  course  which  would  have  enabled  them  to  turn 
this  rise  of  prices  to  the  advantage  of  the  public,  instead  of 
its  being,  as  it  has  proved,  productive  of  loss ;  and  this  end 
would  certainly  have  been  accomplished  if,  at  the  expense  of 
a  small  present  sacrifice,  the  loans  had  been  contracted  at  a 
high  rate  of  interest,  instead  of  their  having  been  contracted, 
as  for  the  most  part  they  were,  in  three  per  cent  annuities. 
It  is  presumable  that  if  the  borrowing  had  been  restricted  to 
the  sums  actually  wanted  from  time  to  time,  without  thought 
of  a  sinking-fund,  the  public  might  possibly  have  had  to  pay 
at  the  outside  a  quarter  per  cent  more  of  annual  interest 
than  they  actually  paid.  At  this  rate  the  deficiency  of  in¬ 
come  compared  with  expenditure  between  1793  and  1815, 
which  amounted,  as  will  be  shown  in  the  next  table,  to 
£425,482,761  would  have  occasioned  an  addition  to  the 
capital  of  the  debt  to  the  amount  of  £455,266,554  of  five  per 
cent  stock,  the  annual  interest  of  which  would  have  been 
£22,763,327,  instead  of  a  nominal  capital  of  £547,292,764, 
with  the  annual  additional  charge  of  £20,690,871.  At  the 
close  of  the  war  the  nominal  capital  of  the  debt  would  have 
then  amounted  to  £724,285,729,  and  the  annual  charge 
to  £32,530,660,  instead  of  £816,311,939  of  capital,  and 
£30,458,204  of  annual  charge,  which  was  the  state  of  the 
unredeemed  public  debt  on  the  5th  of  January,  1816.  The 
government  would  then  have  been  in  the  most  favorable  posi¬ 
tion  for  taking  advantage  of  the  lowering  of  the  rate  of  inter¬ 
est  which  was  certain  to  follow,  and  many  years  before  the 
present  time  the  whole  of  the  five  per  cent  annuities  might 
have  been  converted  without  any  addition  to  the  capital  into 


FINANCES  OF  ENGLAND. 


139 


annuities  of  the  same  amount  bearing  interest  at  the  rate  of 
three  and  a  half  per  cent  or  perhaps  lower.  Assuming,  how¬ 
ever,  that  the  reduction  would  not  have  gone  lower  than 
three  and  a  half  per  cent,  and  taking  into  consideration  the 
surplus  revenue  which  has  been  actually  applied  to  the  re¬ 
demption  of  debt  between  5th  January,  1816,  and  5th  Janu¬ 
ary,  1849,  which,  as  will  be  seen,  amounted  to  £45,779,046, 
the  funded  debt  existing  on  5th  of  January,  1837,  would 
have  amounted  to  £678,506,683,  and  the  annual  charge  to 
£23,747,734,  instead  of  its  actual  amount,  £773,168,316, 
and  its  actual  annual  charge  £27,686,458;  showing  that  the 
loss  entailed  on  the  country  by  the  plan  pursued,  of  funding 
the  debt  in  stock  bearing  a  nominal  low  rate  of  interest,  is 
£94,661,633  of  capital,  and  £3,938,724  of  annual  charge. 
It  is  not  possible  to  calculate  with  certainty  the  further 
benefits  that  must  have  resulted  from  the  repeal  of  five  mil¬ 
lions  and  a  half  of  annual  taxes,  which  would  have  been 
practicable  beyond  the  amount  actually  repealed;  but  it  is 
probably  much  under-estimating  those  benefits  to  state  that 
among  their  results  the  amount  of  public  income  over  expen¬ 
diture  would  have  been  so  far  augmented  that  the  unredeemed 
debt  would  not  at  this  time  have  exceeded  six  hundred  mil¬ 
lions,  while  the  annual  charge  upon  the  same  would  have 
been  twenty-One  millions,  a  state  of  things  at  which,  if  the 
peace  of  Europe  should  continue  undisturbed,  and  if  our  pro¬ 
gress  should  only  equal  our  past  experience,  we  may  possibly 
hope  to  arrive  in  about  half  a  century. 

The  charge  of  inconsistency  on  the  part  of  our  finance 
ministers  is  fully  deserved  by  their  adoption  of  two  measures 
having  for  their  objects  results  exactly  opposed  to  each 
other.  These  measures  are,  first,  the  creation  of  what  is 
called  the  dead-weight  annuity;  and,  secondly,  the  conver¬ 
sion  of  perpetual  annuities  into  annuities  for  lives  or  for 
terms  of  years ;  the  effect  of  the  first  being  to  bring  present 
relief  at  the  expense  of  future  years,  while  the  second  in¬ 
creases  the  present  burden  with  the  view  of  relieving  pos¬ 
terity.  When  the  measure  for  commuting  the  half-pay  and 
pensions  was  brought  forward  in  May,  1822,  the  charge  upon 


140 


ECONOMIC  HISTORY. 


the  country  on  that  account  was  estimated  at  about  five 
millions.  This  was  necessarily  a  decreasing  charge,  and 
from  year  to  year  the  public  would  have  been  relieved  by  the 
falling  in  of  lives  until  at  the  end  of  forty-five  years  the 
whole,  according  to  probability,  would  have  been  extin¬ 
guished.  In  order  to  turn  to  present  advantage  this  prospec¬ 
tive  diminution  of  burden,  it  was  attempted  to  commute  the 
whole  of  those  annually  diminishing  payments  into  an  un¬ 
varying  annuity  to  last  during  the  whole  probable  term  of 
forty-five  years ;  and  it  was  computed  that,  by  the  sale  of  a 
fixed  annuity  of  £2,800,000,  funds  might  be  obtained  in 
order  to  meet  the  diminishing  demands  of  the  quarterly 
claimants.  This  scheme  was  only  partially  carried  into 
execution  by  means  of  an  arrangement  made  with  the  Bank 
of  England,  under  which  that  corporation  advanced  to  the 
government,  in  nearly  equal  payments,  during  the  six  years 
from  1828  to  1828,  the  sum  of  £18,089,419  as  the  purchase 
money  of  an  annual  annuity  of  £585,740  to  be  paid  until 
1867.  The  result  of  this  operation  has  been  to  save  the 
immediate  payment,  during  the  years  in  which  it  was  in 
progress,  of  £9,574,979,  and  in  return  to  fix  upon  the  coun¬ 
try  the  annual  payment  for  thirty-nine  years  thereafter  of 
£585,740. 

In  the  prosecution  of  the  opposite  plan  of  converting  per¬ 
petual  annuities  into  annuities  terminable  at  stated  periods 
or  upon  the  occurrence  of  certain  natural  contingencies, 
the  amount  of  terminable  annuities  has  advanced  from 
£1,888,835,  at  which  it  stood  at  the  end  of  the  war,  to 
£3,755,099  at  the  beginning  of  the  year  1850.  It  would 
occupy  considerable  space  to  exhibit  the  progress  of  this  con¬ 
version  from  year  to  year,  and  it  will  probably  suffice  to 
exemplify  the  result  of  the  operation  during  one  year  (1834). 
In  that  year  the  perpetual  annuities  received  in  exchange 
amounted  to  £6,500,169  of  capital,  bearing  an  annual 
charge  of  £202,831,  and  there  were  granted  in  lieu  of 
the  same,— 


FINANCES  OF  ENGLAND. 


141 


Annuities  for  lives  .  .  .■ . £195,337 

“  for  terms  of  years . 313,138 

Deferred  annuities .  2,871 


Together . £511,346 


making  a  present  annual  increase  of  £308,514  to  the  public 
burdens  in  order  to  ensure  the  earlier  extinction  of  the 
charge  of  £202,831. 

It  is  not  necessary  here  to  inquire  which  of  these  two 
inodes  of  proceeding  is  preferable.  Under  different  circum¬ 
stances  either  of  them  might  be  wise  or  prudent,  but  it  is 
quite  impossible  that  at  the  same  time,  and  consequently  un¬ 
der  the  same  circumstances,  both  could  be  either  wise  or  pru¬ 
dent;  and  the  minister  and  legislators  by  whom  the  plans 
were  proposed  and  sanctioned  must  be  allowed  to  have  stulti¬ 
fied  themselves  by  the  operations.  Of  the  two  courses  that 
is  assuredly  the  most  generous  under  which  the  parties  by 
whom  it  is  adopted  subject  themselves  to  additional  burden 
in  order  to  lighten  the  load  for  their  successors;  and  indeed 
it  would  seem  no  more  than  an  act  of  justice  on  the  part  of 
those  by  whom  the  debt  was  contracted  to  adopt  every  means 
within  their  power  for  its  extinction. 

It  is  singular  that,  with  so  much  experience  and  so  much 
of  scientific  acquirement  that  could  have  been  brought  to  the 
correct  elucidation  of  this  subject,  the  tables  adopted  for  the 
creation  of  terminable  annuities  were  incorrect  to  a  degree 
which  entailed  a  heavy  loss  upon  the  public.  The  system 
was  established  in  1808,  and  during  the  first  year  of  its 
operation  annuities  were  granted  to  the  amount  of  £58,506 
10.s.  per  annum.  Of  that  amount  there  continued  payable 
£23,251  per  annum  at  the  beginning  of  1827,  when,  to  adopt 
the  calculation  of  the  actuary  of  the  national  debt,  as  given 
in  a  report  to  the  Chancellor  of  the  Exchequer,  the  public 
had  already  sustained  a  loss  of  more  than  £10,000  by  the 
transactions,  besides  having  the  above  annual  sum  of  £23,251 
still  to  pay  for  an  indefinite  term.  In  this  report  of  Mr. 
Finlaison  he  states  that  the  loss  to  the  public  through  mis¬ 
calculation  in  these  tables  was  then  (April,  1827)  proceeding 


142 


ECONOMIC  HISTORY. 


at  the  rate  of  <£8,000  per  week,  and  during  the  three  preced¬ 
ing  months  had  exceeded  £95,000.  The  discovery  of  this 
blunder  had  been  made  and  pressed  upon  the  attention  of  the 
finance  minister  as  early  as  1819,  but  no  active  steps  were 
taken  to  remedy  it  until  1828,  and  even  then  the  rates  at 
which  annuities  were  granted  upon  the  lives  of  aged  persons 
were,  after  a  time,  found  to  be  so  unduly  profitable  to  the 
purchasers,  that  the  government  was  again  obliged  to  inter¬ 
fere  and  to  limit  the  ages  upon  which  life  annuities  could  be 
obtained. 

It  is  quite  impossible  that  any  similar  series  of  blunders 
could  have  been  committed  by  any  private  persons  or  asso¬ 
ciation  of  individuals  whose  vigilance  would  have  been 
sufficiently  preserved  by  their  private  interest,  and  it  is  dis¬ 
graceful  that  the  government,  which  could  at  all  times  com¬ 
mand  the  assistance  of  the  most  accomplished  actuaries, 
should  have  fallen  into  them.  It  is  yet  more  disgraceful 
that  after  the  evil  had  been  discovered  and  pressed  upon  its 
notice,  so  many  years  were  suffered  to  elapse  before  any  step 
was  taken  to  put  a  stop  to  the  waste  of  public  money. 

It  would  require  a  voluminous  account  to  explain  all  the 
financial  operations  of  the  government  during  the  period 
embraced  in  the  foregoing  statements.  In  the  earlier  years 
of  that  time,  while  on  the  one  hand  the  minister  was  an¬ 
nually  borrowing  immense  sums  for  the  public  servicej  an 
expensive  machinery  was,  as  we  have  seen,  employed  to  keep 
up  a  show  of  diminishing  the  debt,  and  by  this  means  the 
people  were  brought  to  view  with  some  degree  of  compla¬ 
cency  the  most  ruinous  addition  to  their  burdens  under  the 
expectation  of  the  relief  which,  through  the  magical  effect  of 
the  sinking-fund,  was  to  be  experienced  by  them  in  [future 
years.  The  establishment  and  support  of  this  sinking-fund 
was  long  considered  as  a  master-stroke  of  human  wisdom. 
Having  since  had  sufficient  opportunity  for  considering  its 
effects,  we  have  arrived  at  a  different  conclusion,  and  can  no 
longer  see  any  wisdom  in  the  plan  of  borrowing  larger  sums 
than  were  wanted,  and  paying  in  consequence  more  dearly 
for  the  loan  of  what  was  actually  required  in  order  to  lay 


FINANCES  OF  ENGLAND. 


143 


out  the  surplus  to  accumulate  into  a  fund  for  buying  up  the 
debt  at  a  higher  price  than  that  at  which  it  was  contracted. 

In  the  fourth  report  of  the  Select  Committee  on  Public 
Income  and  Expenditure,  which  was  printed  by  order  of  the 
House  of  Commons  in  1828,  there  are  three  statements 
showing  the  difference  between  the  public  receipts  and  dis¬ 
bursements  in  the  ten  years  ended  5th  January,  1802;  the 
fourteen  years  ended  5th  January,  1816;  and  the  twelve 
years  ended  5th  January,  1828,  an  abstract  of  which  is  here 
given ;  and  the  statement  is  further  continued  for  the  twenty- 
two  years  ended  5th  J anuary,  1850 :  — 


BALANCES  OF  INCOME  AND  EXPENDITURE. 

Ten  Years  ended  5th  January,  1802. 


Expenditure  .  £447,812,773 
Income  .  .  258,659,322 


E  x  p  e  nditure 
more  than 

income  .  .  £189,153,451 


Raised  by  creation  of 

debt . 

Applied  to  redemption 

of  debt . £180,346,440 

Money  raised  for  Aus¬ 
tria  ......  4,600,000 

Discount  and  charges 
of  receipt  ....  2,416,497 


£380,997,380 


Balance  5th  January, 

1802  . £9,027,021 

Balance  5tli  January, 

1792  .  4,546,029 


187,362,937 
£193,634,443 


4,480,992 
£189,153,451 


Fourteen  Years  ended  5th  January,  1816. 


Expenditure  £1,059,683,370 
Income  .  .  823,354,060 


Expenditure 
more  than 

income  .  .  £236,329,310 


Raised  by  creation  ^of 

debt . 

Applied  to  redemption 

of  debt . £651,952,651 

Raised  for  East  India 
Company  ....  2,500,000 

Discount,  etc.  .  .  .  2,887,199 


£900,107,717 


Balance  5th  January, 

1816 . £15,466,578 

Balance  5th  January, 

1802  .  9,027,021 


657,339,850 
£242,767,867 


6,438,557 
£236,329,310 


144 


ECONOMIC  HISTORY. 


Twelve  Years  ended  5th  January,  1828. 


Income  .  .  £670,198,286 
Expenditure .  640,966,521 


Income  more 
than  expen¬ 
diture  .  . 


£29,231,765 


Applied  to  redemption 

of  debt  . 

Discount  and  charges 
of  receipt  .... 


Raised  by  creation  of 
debt . 


Balance  5th  January, 

1816 . £15,465,578 

Balance  5th  January, 

1828  .  4,228,753 


£580,454,422 

544,588 

£580,999,040 

540,530,450 

£40,468,590 


11,236,825 

£29,231,765 


Twenty-two  Years  ended  5th  January,  1850. 


Income  .  £1,092,219,672 

Expenditure .  1 ,0  7  5,645,391 


Income  more 
than  expen¬ 
diture  .  .  £16,574,281 


Applied  to  redemption 
of  debt,  beyond  the 
amount  of  debt  cre¬ 
ated  .  .v  .  .  .  . 

Balance  5th  January, 

1850  . £9,748,539 

Balance  5th  January, 

1828  .  4,228,753 


£11,054,495 


5,519,786 

£16,574,281 


It  appears  from  this  statement  that  during  the  ten  years 
from  5th  Jan.,  1792  to  5th  Jan.,  1802:  — 

The  public  expenditure  exceeded  the  income  .  £189,153,451 

Between  1802  and  1816  the  excess  of  expendi¬ 
ture  was .  236,329,310 


Excess  of  expenditure  during  twenty-four  years 

of  war . £425,482,761 

During  thirty-four  years  of  peace,  between 
1816  and  1850,  the  excess  of  income  over 
expenditure  has  been . 


•  • 


45,779,046 


At  this  rate  it  would  require  three  hundred  and  sixteen 
years  of  peace  to  cancel  the  debt  incurred  during  twenty-four 
years  of  war,  or  thirteen  years  for  one ;  but  the  comparison  is 
even  more  unfavorable  than  this,  because  at  the  time  of  bor¬ 
rowing  the  rate  of  interest  is  high  and  the  value  of  public 


FINANCES  OF  ENGLAND. 


145 


securities  low,  whereas  at  the  time  of  liquidation  the  reverse 
of  these  circumstances  is  experienced ;  so  that  on  the  most 
favorable  supposition  it  requires  fifteen  years  of  saving  in 
peace  to  repair  the  evil  consequences  of  one  year  of  war  ex¬ 
penditure  ;  at  which  rate  our  successors  who  may  be  living 
about  the  close  of  the  twenty-second  century  might,  if  during 
all  that  time  the  nation  should  remain  at  peace,  find  them¬ 
selves  relieved  from  that  portion  of  the  public  debt  which 
has  been  contracted  since  1T92.  On  the  other  hand,  this 
period  would  be  somewhat  hastened  through  the  extinction 
of  that  part  of  our  public  debt  which  consists  of  terminable 
and  life  annuities. 

It  is  necessary  here  to  explain  briefly  the  financial  plans 
which  have  at  different  times  within  the  present  century  been 
proposed  by  the  Government  and  sanctioned  by  Parliament. 

At  the  breaking  out  of  the  war  in  1803  it  became  neces¬ 
sary  to  meet  as  far  as  possible  the  increased  expenditure  of 
the  country  by  the  imposition  of  new  taxes,  among  which 
was  included  the  income-tax  under  the  name  of  a  property- 
tax.  The  greater  part  of  these  taxes  were  declared  to  be  of 
a  temporary  character,  and  were  to  cease  in  six  months  after 
the  re-establishment  of  peace.  It  soon  became  apparent, 
however,  that  to  adhere  to  this  stipulation  would  be  impos¬ 
sible,  since  the  exigencies  of  the  country  required  the  con¬ 
traction  of  loans,  the  interest  of  which  could  not  be  provided 
except  by  the  gradual  appropriation  of  one  portion  after 
another  of  the  proceeds  of  the  war  taxes.  Under  these  cir¬ 
cumstances  it  was  proposed  in  180T  by  Lord  Henry  Petty, 
then  Chancellor  of  the  Exchequer,  to  depart  from  the  usual 
practice  of  confining  the  financial  arrangements  to  the  cur¬ 
rent  year,  and  to  determine  at  once,  as  far  as  was  possible, 
the  amount  which  it  would  be  necessary  to  raise  during  each 
one  of  a  series  of  years,  providing  beforehand  the  means  for 
meeting  the  increasing  burden.  It  was  assumed  that  the 
loans  to  be  raised  in  1807  and  the  two  following  years 
should  be  each  <£12,000,000;  that  for  1810  was  stated  at 
£14,000,000,  and  during  each  of  the  ten  ensuing  years  the 

amount  was  assumed  at  £16,000,000.  It  was  calculated 

10 


146 


ECONOMIC  HISTORY. 


that  the  interest  upon  those  loans  would  be  met,  up  to  that 
for  the  year  1811,  by  the  falling  in  of  annuities,  after  which 
the  war  taxes  were  to  be  pledged  at  the  rate  of  ten  per  cent 
upon  each  loan ;  five  per  cent  to  pay  the  interest,  and  five  per 
ccut  to  accumulate  as  a  sinking-fund  for  discharging  the 
principal.  The  deficiency  that  would  be  occasioned  by  this 
appropriation  year  by  year  of  the  war  taxes  was  to  be  met  by 
supplementary  loans,  for  the  interest  on  which,  and  to  pro¬ 
vide  a  sinking-fund  for  their  redemption,  it  would  be  neces¬ 
sary  to  impose  new  taxes.  By  these  means  it  was  expected 
that  the  country  would  have  been  able  to  meet  the  charges  of 
an  expensive  war  during  a  series  of  years  with  only  a  moder¬ 
ate  addition  to  the  public  burdens.  The  ministry,  of  which 
Lord  Henry  Petty  formed  a  part,  having  gone  out  of  office 
before  the  next  annual  finance  arrangement  was  brought  for¬ 
ward,  his  plan  was  abandoned,  and  no  attempt  has  since  been 
made  by  any  minister  to  form  financial  arrangements  em¬ 
bracing  the  circumstances  of  future  years. 

The  explanations  offered  each  year  in  the  House  of  Com¬ 
mons  by  the  Chancellor  of  the  Exchequer  concerning  the 
financial  condition  of  the  country  are  not  given  in  such  a 
form  as  to  be  readily  understood.  In  the  accounts  by  which 
the  statements  are  accompanied,  the  interest  of  the  debt  and 
other  permanent  charges  are  not  included,  and  on  the  other 
hand  nothing  is  stated  regarding  the  produce  of  the  perma¬ 
nent  taxes,  forming  what  is  called  the  consolidated  fund, 
except  the  amount  of  its  surplus  or  deficiency,  as  the  case 
may  be,  after  providing  for  the  permanent  charge  upon  it. 
The  Budget ,  as  it  is  the  practice  to  call  this  annual  Exposi¬ 
tion,  explains  on  the  one  hand  the  sums  required  for  the 
public  service  during  the  year  under  the  different  heads  of 
Navy,  Army,  Ordnance,  and  Miscellaneous  Services,  to¬ 
gether  with  any  incidental  charges  which  may  apply  to  the 
year;  and  on  the  other  hand  are  given  the  ways  and  means 
for  meeting  the  same.  These  ways  and  means  consist  of  the 
surplus  (if  any)  of  the  consolidated  fund,  the  annual  duties, 
and  such  incidental  receipts  as  come  in  aid  of  the  national 
resources. 


FINANCES  OF  ENGLAND. 


147 


The  detail  of  these  budgets  would  consequently  throw  but 
little  light  upon  the  financial  condition  of  the  country,  if 
even  they  had  been  preserved  in  an  authentic  form,  which  has 
not  been  done.  Any  statements  of  the  kind  that  could  be 
offered  must  be  drawn  from  unauthorized  publications,  in 
which  they  have  been  given  without  regard  to  methodical 
arrangement,  while,  as  respects  some  years  of  the  series,  we 
should  seek  in  vain  for  any  statement  whatever. 


148 


ECONOMIC  HISTORY. 


VII. 

LA  POLITIQUE  COMMERCIALS  DE  LA 

RESTAURATION. 

From  Levasseur’s  Histoire  des  Classes  Ouvrieres  en  France 
depuis  1789  jusqu’a  nos  Jours.1  —  Vol  I.  pp.  405-428. 

LES  lois  commerciales  qui  devraient  etre  principalement 
fondees  sur  les  besoins  de  la  consommation,  sont  sub- 
ordonn^es  en  realite  a  la  politique.  Eaites  par  des  hommes, 
il  leur  arrive  trop  souvent  de  porter  l’empreinte  des  passions, 
et  de  representer  moins  la  nature  des  rapports  economiques 
d’une  nation,  que  les  intdrets  particuliers  et  les  pr6juges  de 
ceux  qui  la  gouvernent. 

II  n’est  pas  de  lois  humaines  qui  soient  a  l’abri  de  ce 
d^faut ;  mais  il  n’en  est  peut-etre  pas  qui  en  soient  plus 
ordinairement  affectties  que  les  lois  relatives  au  commerce 
ext^rieur.  La  Republique  et  l’Empire  s’etaient  acharnes  a 
la  lutte  contre  les  Anglais  ;  la  legislation  douaniere  fut  alors 
armde  en  guerre  et  herissee  de  prohibitions  belliqueuses :  le 
but  6tait  d’ecarter  l’ennemi  de  la  place.  La  Restauration  fut 
pacifique,  mais  obligee  de  se  concilier  les  grands  propridtaires 
et  les  grands  manufacturers  qui  formaient  la  majority  de  la 
Chambre ;  la  legislation  douaniere  se  pliant  a  leurs  exigences, 
continua  a  se  hdrisser  de  prohibitions  mercantiles  et  dgoi'stes : 
le  but,  cette  fois,  dtait  de  rdserver  le  marche  5-  ceux  qui  fai- 
saicnt  la  loi. 

Le  systeme  continental  dtait  devenu  odieux  aux  populations. 
Il  dtait  certain  que  le  nouveau  gouvernement  commencerait 
par  le  renier.  D’ailleurs  la  force  des  choses  y  poussait.  A  la 
suite  des  armies  dtrangeres,  dtaient  entrees,  dans  nos  ports 


1  Paris :  L.  Hachette  et  Cie,  1867. 


LA  POLITIQUE  BE  LA  RESTAURAT10N. 


149 


et  par  toutes  nos  frontieres,  les  denrees  coloniales  et  les 
marcliandises  anglaises.  Les  prix  avaient  eprouve  une  revo¬ 
lution  soudaine,  et  l’on  voyait  se  produire  cette  bizarrerie,  que 
le  sucre,  par  exemple,  se  yendait  communement  38  sous  la 
livre  au  moment  ou  la  loi  le  frappait  encore,  en  droit,  d’une 
taxe  de  44  sous,  et  empechait  ainsi  les  negotiants  de  retirer 
les  approvisionnements  qu’ils  avaient  dans  les  entrepots  :  il 
etait  impossible  de  maintenir  la  loi.  Les  Anglais  d’ailleurs, 
donts  les  desirs  etaient  alors  des  ordres,  en  sollicitaient  le 
rappel.  Peu  de  jours  apres  son  entree  a  Paris,  le  comte 
d’ Artois  signa  deux  ordonnances,  l’une  qui  supprimait  les 
Cours  prevStales,1  P autre,  qui  levait  les  obstacles  mis  au  com¬ 
merce  maritime.2  Les  taxes  prohibitives  furent  remplacees 
par  un  droit  tres  modere  sur  le  sucre,3  et  le  cafe  et  par  un 
simple  droit  de  balance  sur  les  cotons  en  laine. 

Cette  mesure  se  heurta  contre  une  double  opposition. 
L’administration  imperiale,  formee  a  l’ecole  de  la  prohibition, 
s’etait  habitude  depuis  treize  ans  a  en  pratiquer  les  maximes  ; 
elle  etait  en  general  imbue  de  l’esprit  du  systeme  et  d’autant 
moins  disposee  a  y  renoncer  que  l’ingdrence  de  l’Etat  dans 
les  affaires  commerciales  lui  donnait  plus  d’importance.  De 
leur  c6te,  les  grands  industriels  etaient  ddsireux,  comme  tou- 
jours,  de  privileges  et  partisans  des  restrictions  douanieres. 
Mais  ils  etaient  peut-etre  plus  excusables  qu’a  d’autres 
6poques,  parce  que  leurs  interets  etaient  plus  que  jamais 
ancres  sur  le  fond  de  la  prohibition.  Grace  a  leurs  richesses, 
ils  dtaient  appeles  ar  repr^senter  l’industrie  fran^aise,  et,  par 
une  illusion  assez  ordinaire,  disposes  a  prendre  leurs  interets 
pour  les  siens.  Ils  allaient,  avec  les  grands  propri^taires, 
dieter  leurs  conditions  aux  ministres. 

La  Restauration  se  trouva  placee  entre  les  deux  pouvoirs 
de  l’epoque,  l’administration  et  la  Chambre,  qui  voulaient  la 
protection,  Pune  par  habitude,  P autre  par  calcul.  La  protec¬ 
tion  triompha ;  les  tarifs  prirent  un  nouveau  caract^re  non 
moins  exclusif  sur  certains  points  que  celui  de  PEmpire,  et 

1  Ord.  du  26  avril,  1814. 

-  2  Ord.  du  23  avril,  1814.  Yoir  le  Moniteur  de  1814,  p.  451. 

8  Le  sucre  fut  taxe  a  6  sous  la  livre. 


150 


ECONOMIC  HISTORY. 


d’ailleurs  beaucoup  plus  dangereux ;  parce  qu’on  pr^tendit 
6riger  en  un  systeme  commercial  regulier,  ce  qui  n’avait  dte 
jusque-la  qu’une  consequence  regrettee  de  l’etat  de  guerre. 

La  reforme  du  comte  d’ Artois  souleva  une  tempete  de  recla¬ 
mations.  On  aurait  pu  croire  que  les  manufaeturiers  seraient 
satisfaits  de  se  procurer  la  matiere  premiere  a  bon  marclie. 
II  n’en  fut  rien.  L’interet  du  present  les  aveuglait  assez  sur 
l’interet  de  l’avenir,  pour  que  les  cotonniers  de  l’ouest  et  du 
nord,  se  pretendissent  ruines,  parce  que  l’abaissement  des 
droits  sur  le  coton  allait  diminuer  d’autant  la  valeur  des 
etoffes  qu’ils  avaient  en  magasin.  Ils  petitionnerent,  6cri- 
virent  qu’une  “  immense  population  serait  reduite  au  deses- 
poir,”  que  “  la  prohibition  ^st  de  droit  politique  et  social,”  et 
que,  depuis  le  fabricant  jusqu’a  l’ouvrier,  tous  ont  “  le  droit 
de  fournir  exclusivement  a  la  consommation  du  pays  qu’ils 
liabitent.” 1  Ils  demandaient  30  millions  d’indemnite,  et  la 
prohibition  des  fils  et  des  tissus  de  coton  :  ils  obtinrent  la 
prohibition. 

Les  maitres  de  forges  elevaient  d’autres  pretentions.  L’Em- 
pire  n’avait  impose,  il  est  vrai,  qu’une  taxe  modique  de  44 
francs  par  tonne  (1000  kilog.)  sur  les  fers  en  barre.  Mais  la 
guerre  formait  une  barriere  plus  difficile  a  franchir  que  les 
douanes  et  durant  vingt  ans  les  hauts  fourneaux  du  conti¬ 
nent  n’avaient  pas  eu  a  redouter  les  fers  anglais.  Apres  la 
paix,  ils  se  trouverent  tout  a  coup  surpris  par  une  concur¬ 
rence  qui  livrait  ses  produits  a  30  ou  40  pour  100  au-dessous 
des  prix  ordinaires,  et  par  une  crise  commerciale  qui  paraly- 
sait  la  vente.  Vives  reclamations.  Les  maitres  de  forges 
voulaient  sinon  une  indemnite,  au  moins  le  sdquestre  immd- 
diat  des  fers  qui  £taient  encore  en  entrepot  et  la  prohibition 
des  fers  dtrangers ;  ils  obtinrent  le  quadruplement  du  droit 
qui,  d^cime  compris,  fut  porte  a  165  francs,  taxe  reprdsen- 
tant  environ  50  pour  100  de  la  valeur  de  la  marchandise  en 
entrepot.2 

Le  baron  Louis  n’avait  pu  resister  a  l’orage.  Cependant  il 
ne  dissimula  pas  que  le  gouvernement  approuvait  peu  l’esprit 

1  Voir  aux  Arch,  de  l’Emp.,  l’original  d’une  de  ces  petitions  (25  avril,  1814). 

2  Voir  M.  Ame,  Tar  if s  des  douanes,  chap,  xviii. 


LA  POLITIQUE  DE  LA  RES  TA  UR  A  TI  ON. 


151 


de  monopole  des  manufacturers.  “  Les  prohibitions  absolucs 
detruisent  l’dmulation.  Aussi  esp6rons-nous,”  ajoutait-ilv 
“  pouvoir,  aux  sessions  prochaines,  demander  la  reduction  suc¬ 
cessive  du  tarif  que  nous  proposons  aujourd’hui  sur  les  fers.”  1 
II  se  faisait  illusion.  Les  interets  sont  plus  tenaces.  Ils  se 
prdcipiterent  a  la  curee,  reclamant  a  l’envi,  qui  pour  les. 
colons,  qui  pour  les  61eveurs,  qui  pour  les  manufacturers  ; 
et  ce  que  chacun  d’eux  obtint  a  titre  de  faveur  passagere,  il 
pretendit  le  conserver  comme  une  propriete,  il  s’en  fit  meme 
un  titre  pour  obtenir  de  nouveaux  avantages.  C’est  ainsi  que 
les  lois  protectionistes  se  succed£rent  et  s’aggraverent  de 
session  eii  session. 

Le  gouvernement  songeait  a  faire  une  refonte  generate  du 
tarif.  Il  n’en  eut  pas  le  loisir  en  1814,  et  se  contenta  de  pre¬ 
senter  un  projet  par  lequel  il  autorisait  le  transit,  donnait  au 
pavilion  frangais  la  faveur  d’une  surtaxe,  et  relevait,  mais  a 
un  taux  encore  tres  modere,  certains  droits  abaisses  par  l’or- 
donnance  du  28  avril.2  Il  s’excusait  de  ne  pas  faire  plus, 
parce  que  les  douanes  venaient  a  peine  d’etre  rdtablies,  et  il 
hasardait  timidement,  que  “  d’ailleurs  le  bon  march6  provo- 
quait  la  consommation.”  Tel  n’etait  pas  l’avis  de  la  Cham- 
bre,  qui  vota  la  loi,3  mais  en  donnant  une  legon  aux  ministres. 
“  En  principe  d’^conomie  politique,”  disait  le  rapporteur,  “  les 
douanes  sont  etablies  pour  assurer  la  prosp^rite  des  manufac¬ 
tures,  pour  faire  fleurir  l’industrie  nationale.  Elies  sauvent 
le  commerce  en  donnant  aux  fabricants  frangais,  par  des  pro¬ 
hibitions  ou  des  droits  sur  les  productions  de  l’industrie 
dtrangere,  l’avantage  de  la  concurrence  dans  le  march6  in- 
tdrieur ;  elles  sont  utiles  au  consommateur  en  lui  assurant  a 
moindre  prix  les  marchandises  qui  se  fabriquent  ext^rieure- 
ment  avec  des  matieres  premieres  indigenes,  que  l’etranger 
,  accaparerait,  sans  la  prohibition  a  la  sortie.  .  .  .  L’institution 
deviendra  reellement  nationale,  lorsque  la  combinaison  des  dif- 
ferents  reglements  sera  parvenue  au  point  d’activer  dans  les 

1  M.  Ame,  Tarifs  des  douanes,  p.  62. 

2  De  40  &  60  francs  par  quintal  mctrique  sur  le  sucre  brut, 

60  “  “  “  .  “  sur  le  cafe, 

100  “  “  “  “  sur  le  cacao. 

8  Loi  du  17  decembre,  1814. 


152 


ECONOMIC  HISTORY. 


mains  d’un  million  d’ouvriers  l’instrument  qui  les  nourrit, 
lorsque  cette  combinaison  repoussera  par  des  prohibitions 
necessaires  les  marchandises  Etrangeres  dont  l’entree  porterait 
prejudice  aux  marchandises  de  meme  espece  qui  se  fabriquent, 
se  vendent  et  se  consomment  dans  l’interieur.”  1 

Le  ministere  comprit  la  legon,  promit  de  rEdiger  ses  lois  de 
douane  en  vue  de  la  protection,2  et  presenta,  en  1816,  un  nou¬ 
veau  projet  pour  refondre  le  tarif  de  1806,  qui,  j usque-la, 
n’avait  subi  que  des  modifications  de  detail.  II  proposait  des 
droits  plus  forts.  La  Chambre  les  renforga  encore,3  accep- 
tant,  sans  en  peser  la  valeur,  les  arguments  quelquefois  singu- 
liers  que  suggeraient  les  interets  ou  les  prEjuges.  Un  depute 
declarait  la  ceruse  de  Clichy  excellente  pour  la  consomma- 
tion,  superieure  meme,  de  l’avis  de  tout  le  monde,  a  celle  de 
Hollande ;  mais,  ajoutait-il,  le  vulgaire  veut  le  cachet  des 
manufactures  Etrangeres  ;  “  pour  l’en  degouter,  il  demandait, 
et  il  obtint  un  droit  enorme  sur  la  ceruse  etrangere.”  4  Un 
autre  voulait  qu’on  imposat  fortement  le  thE,  parce  que  les 
Anglais  le  fournissent,  et  que  “  c’est  autant  de  numeraire  qui 
sort  de  France.”  5  Sur  la  demande  des  agriculteurs,  la  pro¬ 
hibition  des  peaux,  a,  la  sortie,  fut  levee  d’une  part,  et  d’autre 
part,  l’entree  des  eaux-de-vie,  autres  que  de  vin,  fut  proliibee. 
On  retablit,  en  pleine  paix,  les  rigueurs  de  la  legislation  prE- 
vStale,  et  l’on  autorisa  la  recherche  et  la  saisie  a  rinterieur 
des  etoffes  prohibees.6 

La  Chambre  introuvable  fut  dissoute.  Mais  le  cabinet  eut 
besoin,  en  1817  comme  en  1816,  de  s’appuyer  sur  une  ma- 
jorite  qui,  si  elle  ne  professait  pas  les  memes  sentiments  poli- 
tiques,  avait  en  agriculture  et  en  industrie  les  memes  interets 

1  Rapport  de  Magnic-Grandprez,  Moniteur  de  1814,  p.  1253. 

2  Moniteur  de  1815,  p.  1253. 

3  Le  gouvernement,  par  exemple,  proposait  de  creer  un  entrepot  a  Lille. 
Les  deputes  des  ports  de  mer  se  recrierent  et  firent,  apres  un  long  debat,  sup- 
primer  l’article. 

4  Moniteur  de  1816,  p.  440. 

6  Ibid.,  p.  439. 

6  Loi  du  28  avril,  1816.  —  Art.  59.  A  dater  de  la  publication  de  la  presente 
loi,  les  cotons  files,  les  tissus  et  tricots  de  coton  et  de  laine  et  tous  autres  tissus 
de  fabriques  etrangeres  prohibes  seront  recherches  et  saisis  dans  toute  l’etendue 
du  royaume. 


LA  POLITIQUE  DE  LA  RE  ST  A  UR  A  TION. 


153 


et  les  memes  exigences.1  La  legislation  commerciale  se  sentit 
done  peu  da  souffle  liberal  qui  inspirait  alors  le  gouverne- 
ment.  Lorsque  la  question  des  tarifs  se  produisit  a  la  session 
de  1817,  le  directeur  general  des  douanes  se  contenta  de 
glisser  timidement  un  eioge  platonique  de  la  liberte  des 
echanges,2  tout  en  declarant  aussifflt  ne  vouloir  porter  aucune 
atteinte  au  syst£me  prohibitif,  “  qu’il  est,”  ajoutait-il,  “  sage  de 
respecter  aussi  longtemps  que  nos  manufactures  se  croiront 
fondees  a  le  considerer  comme  leur  plus  solide  appui.” 

Les  deputes  voulaient  non-seulement  le  respecter,  mais  le 
fortifier.  Les  proprietaires,  en  faveur  des  maitres  de  forges 
auxquels  ils  vendaient  leur  bois,  cherchaient  a  ecarter  la  con¬ 
currence  des  fers  etrangers,  et  ne  prenaient  guere  la  peine  de 
dissimuler  le  mobile  qui  les  faisait  agir.3  Les  industriels, 
pensant  que  “  la  prosperite  des  manufactures  peut  seul  pro¬ 
curer  des  consommateurs  utiles  a  l’agriculture,”  4  voulaient 
qu’on  supprimat  tout  droit  d’entree  sur  les  matures  premieres, 
et  le  directeur  general  avait  quelque  peine  a  defendre  les  in- 
t^rets  du  fisc.  La  loi  du  27  mars,  1817,  ajouta  quelques  re¬ 
strictions  nouvelles  au  commerce  extdrieur. 

Celle  du  21  avril  1818  fut  le  sujet  d’un  curieux  ddbat. 
Avant  1789,  les  provinces  d’etranger  effectif  n’^tant  pas 
comprises  dans  la  circonference  des  douanes,  commergaient 
librement  avec  les  pays  voisins ;  1’ Alsace  etait  du  nombre,  et 
avait  gagn6  cinq  millions  par  an  au  transport  des  marchan- 
dises  entre  l’Allemagne  et  la  Suisse.  La  Revolution,  en  por- 
tant  la  ligne  des  douanes  a  la  fronti£re,  avait  interrompu  ces 

1  Cependant  le  rapporteur,  Morgan  de  Belloy,  parla  avec  moderation  et  fit 
des  veeux  pour  l’entier  affranchis'sement  des  matieres  premieres  que  les  cireon- 
stances  ne  permettaient  pas  de  degrever.  —  Moniteur  de  1816,  p.  291 ;  voir  aussi 
la  loi  qui  fut  promulguee  le  28  avril,  1816. 

2  Sans  doute  il  est  louable  d’annoncer,  hautement  le  dcsir  de  cette  heureuse 
revolution  dans  le  systeme  commercial  du  monde ;  mais  nous  n’aurons  pas  la 
liardiesse  de  vous  conseiller  d’en  devancer  i’epoque.  —  Moniteur  de  1817, 
p.  146. 

8  Le  general  Augier  proposait  un  amendement  pour  porter  de  20  a  30  fr.  par 
100  kil.  le  droit  impose  par  la  loi  du  21  decembre,  1814,  sur  les  fers  lamines,  que 
les  etrangers  fabriquaient  par  des  procedes  economiques.  —  Moniteur  de  1817, 

p.  286. 

4  Moniteur  de  1817,  p.  278.  Discours  du  comte  Beugnot. 


154 


ECONOMIC  HISTORY. 


relations ;  l’Empire,  par  ses  prohibitions  contre  le  commerce 

maritime,  les  avait  en  partie  renouees ;  mais,  depuis  1815,  le 

benefice  en  avait  passe  au  grand-duchd  de  Bade.  L’ Alsace 

reclamait.1  Le  projet  de  loi  donnait  enfin  satisfaction,2  en 

autorisant  par  divers  bureaux  le  transit  de  certaines  mar- 

chandises  et  surtout  dcs  denrees  coloniales.  Aussit6t  les 

* 

ports  de  mer,  defenseurs  ordinaires  de  la  liberty  commerciale 
quand  elle  servait  les  intdrets  particuliers  de  leurs  armateurs, 
s’ecrierent  qu’en  permettant  le  passage  des  denrees  coloniales, 
on  facilitait  les  ventes  des  Hollandais  en  Suisse,  au  detriment 
de  la  marine  frarigaise  qui  avait  la  pretention  de  fournir  seule 
le  sucre  et  le  caf6  a  la  R^publique  helvdtique.  En  vain  rad- 
ministration  prouva-t-elle  surabondamment  qu’il  s’agissait 
seulement  de  faire  prendre  aux  marchandises  la  rive  gauche 
du  Bhin  au  lieu  de  la  rive  droitc,  et  que  les  Hollandais  n’en 
vendraient  pas  une  caisse  de  plus  a  la  Suisse,  ni  nos  ports 
une  caisse  de  moins.3  La  commission  rejeta  Particle ;  et  la 
Chambre,  malgr6  les  protestations  des  representants  de  l’Al- 
sace,  vota  sa  commission.  Ce  fut  seulement  un  an  plus  tard, 
a  la  suite  d’une  enquete,  que  le  ministere,  persistant  dans  son 
dessein,  parvint  a  faire  voter  le  transit  par  P Alsace,  a  la  faible 
majority  de  17  voix  sur  195  votants.4 

C’est  par  le  memo  ministere  que  fut  pr^sentde  la  premiere 
loi  constituant  en  France,  a  l’image  de  l’Angleterre,  le  systeme 
de  Veclielle  mobile.  “  L’intdret  de  la  propridt^  et  de  l’industrie 
agricole”  l’avait  dictee.  Pour  la  premiere  fois,  les  restrictions 
douanieres  relatives  au  commerce  des  c^r^ales  furent  dirig^es, 
non  plus  contre  l’exportation  comme  on  Pavait  fait  par  le 
passd,  mais  contre  Pimportation ; 5  il  fallait  que  les  marclids 

1  Voir  les  voeux  du  Bas-Rhin,  sessions  des  Conseils  generaux  de  1817  et  de 
1818.  En  1819,  le  Conseil  general  se  plaignit  que  les  conditions  faites  au  tran¬ 
sit  fussent  trop  onereuses.  Dans  les  annees  suivantes,  ce  fut  le  tour  des  departe- 
ments  de  Tancienne  Lorraine  qui  re'clamerent  de  meme  benefice  que  l’Alsace. 

2  Article  34  du  projet. 

3  Voir  M.  Ame,  Etude  €conomique  sur  le  tarif  des  douanes ,  p.  84,  et  le  Moniteur 
de  1818,  p.  333.  Le  rapporteur  Morgan  de  Belloy  parle  “des  alarmes  des  nego- 
ciants  des  ports  qui  ont  a  se  prevaloir  de  la  possession  et  des  lois  solennelles.” 

4  Loi  du  26  mai,  1819. 

5  Cette  loi  du  10  juillet,  1819,  ctablissait  a  l’importation  un  double  droit; 
droit  fixe  de  25  centimes  par  quintal  de  grains  pour  les  navires  fran9ais,  de  1  fr. 


LA  POLITIQUE  DE  LA  RES  TA  UR  A  T1  ON. 


155 


restassent  aux  fermiers  nationaux,  dut  le  peuple  payer  cher 
sa  subsistance. 

La  nature  dejoua  les  calculs  des  legislateurs.  La  r^colte 
fut  abondante,  et  les  prix,  que  la  disette  de  1816  avait  fort 
exageres,  baisserent.  De  nouvelles  reclamations  se  firent 
entendre,  d’autant  plus  vives  qu’elles  etaient  plus  sures  d’etre 
favorablement  ^coutees  sous  l’administration  du  comte  de 
Villele.  On  accusait  l’importation.  Verification  faite,  il  se 
trouva  que  cette  importation  avait  a  peine  excede  Fexpor- 
tation  de  700,000  hectolitres.  On  se  rejeta  sur  l’effet  moral 
des  arrivages  qui  intimidaient,  disait-on,  la  hausse. 

II  fallut  une  nouvelle  loi,  qui  donnat  de  nouvelles  facilites 
a  1’exportation  et  mit  plus  obstacles  a  Fimportation.  Pre¬ 
sentee  dans  la  session  de  1821,  par  le  ministere,  remaniee  et 
considerablement  aggravde  par  la  commission,  elle  fut  votee 
par  une  nombreuse  majorite.1 

On  se  felicitait  de  mettre  ainsi  les  agriculteurs  a  l’abri  de  la 
concurrence.  On  n’oubliait  qu’une  chose  ;  l’interet  des  masses 
dont  le  pain  est  le  principal  aliment.  II  est  vrai  qu’un  depute 
etait  venu  soutenir  que  la  cherte  du  pain  etait  un  bien  pour 
les  ouvriers,  parce  qu’elle  les  obligeait  a  travailler  avec  plus 
d’ardeur  pour  vivre.  Mais  cette  singuli£re  theorie  trouva  peu 
d’echo ;  les  proprietaires  n’avaient  aucune  intention  d’affamer 
la  classe  ouvriere  :  seulement  ils  songeaient  a  eux-memes. 
Benjamin  Constant  le  leur  fit  sentir.  “  Je  me  bornerai,”  s’ecri- 
ait-il,  interrompu  par  les  murmures  de  l’assembl^e,  “  je  me 


25  pour  les  navires  etrangers ;  droit  variable  de  1  franc  par  chaque  franc  de 
baisse  des  qu’on  descendait  dans  les  trois  regions  de  la  France  audessous  des 
prix  normaux  de  23,  21,  et  18  francs;  a  la  limite  de  20,  18,  et  16  francs,  toute 
importation  etait  interdite.  La  loi  fut  votee  a  une  majorite  de  234  voix 
contre  28. 

1  Par  282  voix  contre  54.  Dans  cette  loi  du  4  juillet  1821,  la  taxe  variable 
commen^ait  a  etre  per9ue  quand  les  prix  etaient  a  26  francs  dans  la  premiere 
classe,  k  20  dans  la  derniere,  et  les  importations  cessaient  au  taux  de  22  et  de 
18  francs.  L’echelle  mobile  k,  l’importations  fonctionnait  entre  26  et  18  francs, 
c’est-a-dire  qu’elle  fut  elevee  de  2  francs  au-dessus  de  la  limite  de  1819.  L’ex- 
portation,  au  contraire,  permise  seulement  jusqu’a  23  fr.  par  la  loi  de  1819,  eut 
25  francs  pour  limite  en  1821 :  double  avantage  pour  les  agriculteurs,  qui  pou- 
vaient  exporter  plus  longtemps,  et  qui  e'taient  plus  tot  a  l’abri  de  la  concurrence 
etrangkre. 


156 


ECONOMIC  HISTORY. 


bornerai  a  vous  dire  qu’il  est  facheux  de  voir  que  vous  faites 
rencherir  les  denrees  que  vos  terres  produisent  et  dont  vos 
greniers  sont  remplis.”  1 

Cepetfdant  les  effets  ne  repondirent  pas  a  l’attente  des  pro- 
prietaires.  Le  ble  baissa  pour  ainsi  dire  d’annee  en  annee : 
il  tomba  a  14  fr.  80  cent.,  en  1825.  Les  tarifs  n’y  faisaient 
rien.  Pourtant  ils  etaient  rigoureux ;  car  durant  les  neuf 
annees  qui  s’ecoulerent  de  la  publication  de  la  loi  a  la  revolu¬ 
tion  de  juilletj  l’importation  ne  fut  permise  que  pendant  un 
seul  mois,  en  fevrier,  1828.  On  ne  pouvait  aggraver  le  tarif. 
Mais  a  pour  calmer  l’opinion,”  on  porta,  en  1825,  une  loi  qui 
supprimait  l’entrepot  fictif  des  grains. 

L’evenement  qui  avait  precipit^  la  chute  du  ministere,  deja 
chancelant,  dans  lequel  le  comte  Decazes  avait  tente  un  rap¬ 
prochement  entre  les  convictions  royalistes  et  les  principes 
liberaux,  n’etait  pas  de  nature  adoucir  le  regime  douanier. 
Les  grands  proprietaires  prirent  une  influence  plus  decisive  et 
le  systeme  protecteur  se  consolida :  temoin  la  loi  de  1821  sur 
les  cereales.  Les  int^ress^s  ne  se  lassaient  pas  de  demander, 
et  chaque  concession  faisait  naitre  de  nouvelles  exigences 
qui  se  produisaient  a  la  tribune,  dans  les  petitions,  dans  les 
voeux  des  conseils  generaux.  Tout  argument  leur  dtait  bon. 
L’industrie  languissait-elle  ;  ils  declaraient,  comme  les  maitres 
de  forges  de  la  Haute-Saone,  qu’ils  etaient  menaces  de  ruine 
par  Pintroduction  trop  facile  des  fers  etrangers  et  deman- 
daient  qu’on  renforgat  les  barrieres.2  L’industrie  prosp£rait- 
elle ;  ils  declaraient,  comme  les  fabricants  de  Saint-Quentin, 
qu’il  importait  66  au  progres  de  l’industrie  manufacturiere  de 
la  rassurer  completement  sur  le  maintien  des  lois  prohibi- 
tives.”  3  Pour  la  vente  a  l’intdrieur,  les  departements  postu- 
laient  a  l’envi  les  fournitures  de  l’Etat,4  et  l’esprit  d’exclusion 
etait  tel  que  quelques-uns  eussent  volontiers  relevd  les  barri¬ 
eres  du  moyen  Sge  au  profit  des  manufactures  provinciates : 
le  Loir-et-Cher  voulait  qu’on  fit  exclusivement  a  habiller  les 

1  Moniteur  du  30  avril,  1821. 

2  Haute  Saone.  —  Voeux  des  Conseils  generaux  en  1819. 

8  Aisne.  —  Voeux  des  Conseils  generaux  en  1825. 

4  Voir  Herault  en  1818,  Pyrenees-Orientales  en  1821,  Aveyron  en  1825,  etc. 


LA  POLITIQUE  DE  LA  LIES  TA  UR  A  TI  ON. 


157 


soldats  de  la  legion  de  Loir-et-Cher,  avec  des  draps  et  autres 
etoffes  de  la  fabrique  de  Romorantin.1 

Dans  une  telle  disposition  des  esprits,  le  tarif  ne  satisfaisait 
jamais  toutes  les  cupidites.  II  fut  remanie  par  des  lois  pres- 
que  consecutives  rendues  en  1820,  en  1822,  en  1826, 2  sans 
compter  les  projets,  qui  n’aboutirent  pas  et  les  ordonnances 
qui,  dans  l’intervalle  des  sessions,  aggraverent  plusieurs  taxes. 
L’administration  elle-meme  se  fatigua,  et,  en  1822,  le  direc- 
teur  general  osa  feliciter  ironiquement  les  deputes  de  n’avoir 
apporte  aucun  changement  a  la  loi  des  douanes  dans  le  cours 
de  l’annee  pr^cedente.  “  C’est,  disait-il,  un  avantage  que  nous 
aimerions  a  voir  se  rdpeter.  Les  lois  de  douanes  veulent  etre 
stables.”  3  Les  deputes  pensaient  autrement.4 

Apres  les  grains,  la  question  principale  a  la  Chambre  etait 
celle  des  fers,  qui  reunissait  dans  un  meme  interefc  les  direc- 
teurs  des  usines  et  les  proprietaires  des  bois.  La  loi  du  17 
decembre,  1814,  avait  eleve  les  droits  sur  les  fers  de  toute 
espece ;  mais  dans  la  repartition  des  faveurs  du  tarif,  les  aciers 
avaient  6te  les  moins  favorises.  Ils  reclam&rent,  au  nom 
meme  de  leurs  progres,5  et  la  loi  du  7  juin,  1820,  fit  droit  a 
leurs  plaintes  en  augmentant  les  taxes  de  45  a  60  pour  100 : 
c’ etait  frapper  directement  les  instruments  indispensables  au 
travail,  limes,  faux,  outils.  Mais  il  entrait  dans  le  systeme 
de  la  Chambre  de  pr^ferer  I’interet  du  produeteur,  interet 
imm^diat,  exigeant,  calculant  son  profit  par  grosses  sommes, 
a  l’int^ret  du  consommateur,  dont  la  perte  semblait  legere 
parce  qu’elle  se  repartissait  sur  un  grand  nombre  de  tetes. 

La  mgme  loi  facilita  la  sortie  des  laines  indigenes  et  mit  un 
droit  a  l’entr^e  des  laines  etrang&res.  Les  fabricants  de  draps 
firent  une  opposition  vive.  Mais  cette  fois  encore  la  cause  de 

* 

1  Session  de  1819. 

2  Loi  du  7  juin,  1820 ;  loi  du  27  juillet,  1822  ;  loi  du  17  mai,  1826. 

8  Mon  i teur  de  1822,  p.  86. 

4  “  Soumettre  les  douanes  a  une  regie  invariable,  c’est  leur  interdire  les  pro¬ 
gres  qu’une  louable  emulation  aspire  sans  cesse  favoriser.”  —  Moniteur  de  1820, 
p.  526,  Rapport  de  Morgan  de  Belloy. 

5  Le  jury  des  arts  leur  a  rendu  les  plus  honorables  temoignages  et  la 
grande  majorite  de  votre  Commission  a  pense  qu’il  convenait  de  leur  accorder 
l’encouragement  de  nouveaux  droits.  —  Moniteur  de  1820,  p.  56. 


158 


ECONOMIC  HISTORY. 


la  production,  fortifi^e  de  l’interet  agricole,  l’emporta  sur 
l’interet  des  consommateurs ; 1  et,  lorsqu’apres  une  longue 
discussion  qui  avait  eu,  comme  toujours,  pour  resultat  d’ag- 
graver 'les  taxes  primitives,  le  vote  d’ensemble  eut  lieu,  il  se 
trouva  dans  l’urne  185  boules  blanches  contre  une  seule  boule 
noire.2  Les  deputes  ne  purent  s’empecher  de  rire ;  il  y  avait 
alors  sur  la  question  du  systeme  protecteur  une  parfaite  en¬ 
tente  entre  les  partis. 

L’accord  6tait  devenu  moins  unanime  en  1822.  Le  prix 
des  fers  fabriques  au  bois  et  au  marteau  avait  baisse  par  un 
de  ces  accidents  frequents  du  marche,  dont  on  doit  s’applaudir 
quand  ils  ont  pour  cause  une  production  plus  6conomique.3 
Nouvelles  doleances  des  maitres  de  forges  qui  s’en  prirent 
a  Fimportation,  et  obtinrent  une  ordonnance  augmentant  les 
droits.  Aussitot  des  reclamations  de  tout  genre  assaillirent 
le  ministere  qui,  bien  que  peu  dispose  a  remanier  les  tarifs,  dut 
ceder,  en  declarant  que  l’int^ret  du  fisc  6tait  cette  fois  tout 
a  fait  stranger  a  la  mesure.4  Il  prdsenta  un  projet  qui,  comme 
le  disait  le  baron  de  Saint-Cricq,  dans  l’expos^  des  motifs, 
avait  pour  but  “  de  prot^ger  et  pour  cela  d’encourager  par  de 
forts  droits  sur  les  produits  du  dehors,  de  defendre  meme 
par  des  prohibitions  toutes  les  exploitations  du  sol,  tous  les 
efforts  de  l’industrie.”  Vouloir  proteger  tout,  c’eut  6t6  ne 
rien  proteger. 

Ndanmoins,  la  Chambre,  trouvant  le  projet  insufhsant,  le 
refondit.  Le  rapporteur  de  la  commission  etait  Bourienne. 
Celui-ci  professait  comme  principe  6conomique  que  le  peuple 

1  Le  projet  ministeriel  avait  mis  un  droit  de  20  pour  100,  au  lieu  de  la  pro¬ 
hibition,  pour  les  chales  cachemires,  parceque  cette  prohibition  etait  tout  k  fait 
illusoire.  L’assemblee  retablit  la  prohibition ;  cette  fois  les  fabricants  de  lai- 
nage  appuyerent,  et  la  Chambre  vote  a  Tunanimite'.  —  Moniteur  de  1820,  p.  5G7. 

2  . Moniteur  de  1820,  p.  626. 

3  Les  fers  au  bois  ou  au  marteau  etaient  tombes  de  400  a  500  francs  la  tonne 
par  suite  de  la  concurrence  des  fers  a  la  houille  ou  la  laminoir. 

4  “  Les  autres,”  disait  le  baron  de  Saint-Cricq,  “  modifient  quelques  articles  du 
tarif,  non  dans  l’interet  du  Tresor;  car  plusieurs  taxes  subissent  une  reduction, 
et  l’augmentation  proposee  sur  quelques  autres  aura  pour  effet  d’attenuer  les 
recettes  en  restreignant  l’importation  des  objets  qui  en  seront  greves,  mais 
dans  la  seule  vue  de  satisfaire  a  des  interets  nouveaux  ou  mieux  constates.,,— 
Moniteur  de  1822,  p.  79. 


LA  POLITIQUE  DE  LA  RE  ST  AURA  TION. 


159 


“  le  plus  riche  etait  toujours  celui  qui  exportait  le  plus  et  qui 
importait  le  moins.”  II  en  developpait  les  consequences  par 
des  arguments  que  l’Assemblee  eut  sans  doute  moins  approu- 
v£s,  si  elle  eut  ete  plus  desinteressee.  “  Les  lois  de  houanes,” 
disait-il,  “  en  favorisant  et  en  satisfaisant  un  grand  nombre 
d’intdrets  generaux,  blessent  quelques  interets  particuliers  ; 
mais  c’est  un  mal  inevitable,  et  lorsqu’il  est  bien  demontre 
qu’une  mesure  est  utile  au  grand  nombre,  il  faut  la  prendre. 
Dans  les  soci£t£s  humaines,  tout  se  resout  par  des  majorites. 
Le  marchand  en  general  repousse  les  droits  qui  diminuent  ses 
profits.  Force  de  s’adresser  a  l’industrie  interieure  il  gagnera 
peut-etre  moins,  mais  le  pays  y  gagnera  plus.  Tout  ce  qu’un 
peuple  consomme  est  un  element  d’aisance  et  de  prosperity 
nationales ;  tout  ce  qu’il  consomme  par  echange  est  encore 
favorable ;  tout  ce  qu’il  achete  avec  de  l’argent  pour  sa  con- 
sommation,  l’appauvrit.” 

Les  vieilles  erreurs  de  la  balance  du  commerce  dtaient  en¬ 
core  vivaces.  Mais  il  etait  au  moins  singulier  d’invoquer 
l’interet  general,  quand  les  objets  frappes  de  droits  dtaient 
de  ceux  que  tout  le  monde  consomme,  quand  on  faisait  en- 
cherir  le  sucre,  la  viande,  et  le  fer  au  profit  de  trois  categories 
de  producteurs.  Le  comte  de  Laborde  ne  craignit  pas  de  le 
leur  reprocher.  “La  loi  que  vous  allez  rendre,”  dit-il,  “est 
essentiellement  privilegiaire  ;  c’est  une  prime  que  toute  la 
France  va  payer  aux  colons,  aux  maitres  de  forges,  aux  nour- 
risseurs  de  bestiaux  de  la  Normandie.”  En  effet  la  loi  du  27 
juillet,  1822,  portait  principalement  sur  ces  trois  points. 

La  loi  du  28  avril,  1816,  avait  mis  sur  les  sucres  etrangers 
une  taxe  sup^rieure  de  33  pour  100  a  celle  des  sucres  de  nos 
colonies :  grande  faveur,  qui  en  peu  d’annees  doubla  le  chiffre 
des  importations  coloniales  et  permit,  en  1821,  a  nos  planteurs 
de  placer  en  France  50  millions  de  kilogrammes  de  sucre, 
tandis  que  les  Strangers  n’en  vendaient  que  2,600,000  kilo¬ 
grammes.  Cependant,  les  planteurs  se  trouvaient  gends  par 
cette  concurrence ;  ils  obtinrent  que  la  surtaxe  fut  61ev£e  a  50 
pour  100.  Les  interess^s  auraient  voulu  plus  encore.  Ils 
tomberent  de  Charybde  en  Scylla ;  car,  si  les  sucres  strangers 
ne  vinrent  plus,  le  sucre  de  betterave,  sollicite  par  les  hauls 


160 


ECONOMIC  HISTORY. 


prix,  les  remplaga  et  disputa  bient6t  le  marchd  aux  produits 
des  Antilles. 

Les  boeufs  entraient  en  franchise  sous  1’ Empire  ;  ils  avaient 
6te  sounds  au  droit  modere  de  3  francs  a  partir  de  1816,  et  ils 
continuaient  a  entrer.  Les  ^leveurs  reclamerent  et  le  ministre 
dut  proposer,  dans  son  projet,  de  decupler  la  taxe  sur  les 
boeufs  gras.  C’dtait  enorme  surtout  un  pays  ou  “  la  viande 
est  un  objet  de  luxe  pour  les  classes  inferieures,”  comme  disait 
un  depute.  La  Chambre  ne  le  jugeait  pas  ainsi ;  elle  demanda 
beaucoup  plus,  et  finit  par  obtenir  50  francs.  En  meme  temps, 
malgre  le  ministere,  elle  augmenta  les  taxes  d’entree  sur  les 
laines,  sur  les  suifs,  sur  les  viandes  fraiches  et  salees. 

Les  maitres  de  forges  declaraient  le  droit  de  165  fr.  tout  a 
fait  insuffisant,  et  le  directeur  general,  soutenant  leurs  preten¬ 
tions,  annongaitavec  effroi  que  1’importation  des  fontes  s’etait 
elevee,  en  six  ans,  de  800,000  kilogrammes  a  7,000,000.  “  C’e- 
tait,”  ajoutait-il,  “  un  avertissement  pour  l’administration.” 1 
Le  droit  sur  les  fers  a  la  houille  fut  porte  a  275  fr.,  represen- 
tant  120  pour  100  de  la  valeur  des  marchandises  anglaises 
qu’on  voulait  ecarter.  On  reussit ;  car  la  production  du  gros 
fer  doubla,  et  rimportation  anglaise  devint  presque  nulle. 
Mais  le  fer,  qui  sous  Louis  XVI.  valait  350  fr.,  monta  a  650 
fr.  la  tonne.  C’etait  un  triste  progres.  Encore  les  forges  ne  re- 
cueillirent-elles  pas  le  profit  de  ce  lourd  impot  preleve  sur  l’in- 
dustrie  nationale.  u  Nous  faisions  quelques  bdnefices,”  disait 
en  1828  un  propri^taire  d’usine,  “  quand  nous  vendions  a  450 
fr.,  et  nous  perdons  aujourd’hui  en  vendant  a  500  fr. ;  la  cause 
en  est  qu’en  1819  la  banne  de  charbon  revenait  a  18  fr.  05  c., 
tandis  qu’elle  revient  a  37  fr.  50  c.”  L’avantage  restait  aux 
proprietaires  fonciers. 

Les  plus  clairvoyants  ou  les  moins  engages  dans  les  interets 
prohibitionnistes  commengaient  a  entrevoir  le  danger  du  sys- 
teme.  Ternaux  le  signalait :  u  L’Espagne,”  disait-il,  “  a  repondu 
par  une  prohibition  de  nos  produits  manufactures  a  l’inipot  mis 
sur  les  laines,  et  le  ralentissement  de  la  draperie  a  fait  baisser 
les  laines  frangaises.” 2  Plusieurs  s’etonnaient  qu’une  matiere 

1  Voir  le  Moniteur  de  1822,  p.  940. 

3  Moniteur  de  1822,  p.  399. 


LA  POLITIQUE  DE  LA  EESTAURATION. 


161 


premiere,  telle  que  la  fonte,  fut  pour  ainsi  dire  proscrite,1  et 
le  comte  de  Laborde  s’indignait,  au  nom  du  progres  industriel, 
qu’il  eut  fallu  payer  7,000  fr.  de  droit  pour  introduire  a  Saint- 
Etienne  une  machine  a  vapeur.2  Mais  les  prohibitionnistes 
montraient  en  perspective,  au  moindre  relachement  des  ri- 
gueurs,  le  marcli6  fran^ais  envahi,  nos  ateliers  fermes,  nos 
ouvricrs  sans  travail,  et  obtenaient  sans  peine  un  vote  favor¬ 
able,  en  evoquant  le  fantdme  de  la  mine  et  de  la  mis£re  uni- 
verselles  pour  r^torquer  l’argument  de  leurs  adversaires  en 
faveur  des  consommateurs.3 

Meme  apres  la  loi  de  1822,  ils  reclamaient  encore.  Ladroite 
trouvait  que  le  ministdre  n’avait  pas  assez  fait  pour  l’agricul- 
ture  et  pour  le  commerce.  Elle  provoqua,  en  1823,  la  creation 
d’un  comite  d’enquete  qui  devait  “  s’attacher  surtout  a  recher- 
cher  si  les  objets  etrangers  importes  en  France  y  sont  d’une 
necessity  indispensable  comme  mature  premiere.”  4 

Yivement  attaque  a  ce  sujet  par  le  comte  de  Vaublanc, 
ancien  ministre,5  le  baron  de  Saint-Cricq,  qui,  depuis  le  com¬ 
mencement  de  la  Restauration,  occupait  le  poste  de  directeur 
general  des  douanes,  se  d^fendit  par  une  lettre  inseree  au 
Moniteur ,  professant  hautement  la  doctrine  protectionniste,6 
qu’il  avait,  disait-il  defendue  avant  M.  de  Vaublanc,  mais 
declarant  que  pour  la  rendre  pratique  il  fallait  se  garder  de 
la  pousseur  a  l’extreme,  et  rappelant  les  faveurs  dont  le  gou- 

1  Entre  autres,  Duvergier  de  Hauranne  et  Laine. 

2  Moniteur  de  1822,  pp.  939  et  940. 

3  “  Laissez  entrer  les  tissus  de  coton,  les  draps,  les  faiences,  les  fers,  les 
fontes,  les  sucres,  et  une  foule  d’autres  articles  que  vous  ne  pouvez  encore  fab- 
riquer  ou  produire  au  prix  de  nos  voisins,  la  consequence  immediate  sera  la 
ruine  de  vos  colonies,  de  vos  manufactures,  la  misere  de  deux  millions  d’ou- 
vriers,  Importation  rapide  de  votre  numeraire  et  la  diminution  plus  rapide 
encore  de  vos  contributions.”  —  Discours  de  Bourienne,  rapporteur,  en  reponse 
a  Labbey  de  Pompieres;  Moniteur  de  1822,  p.  902. 

4  Moniteur  de  1823,  seance  du  15  mars,  p.  310.  Le  ministere  posa  la  question 
d’Ltat,  declarant  qu’il  serait  dangereux  que  la  Chambre  empietat  sur  les  at¬ 
tributions  de  la  puissance  executive,  et  la  proposition  fut  rejetee;  la  droite 
murmura.  C’est  a  ce  propos  que  furent  publies  les  premiers  tableaux  du  com¬ 
merce  exterieur ;  l’attaque  eut  au  moins  de  ce  cote  un  bon  resultat. 

5  Du  Commerce  de  la  France  en  1820  et  1821,  brochure. 

6  “II  n’est  pas  de  bon  tarif  pour  la  France  que  celui  qui  reserve  aux  Fran- 
<jais  le  plus  de  travail  possible.” 


11 


162 


ECONOMIC  HISTORY . 


vernement  avait  combl£  les  agriculteurs  et  les  manufacturers, 
trop  oublieux  des  services  passes.  Cette  lettre  peut  $tre 
regardee  comme  le  manifeste  de  l’administration  douaniere  du- 
rant  cette  p^riode  :  “  Depuis  la  Restauration,”  disait  le  baron 
de  Saint-Cricq,  “  les  lois  de  douanes  se  sont  appliqu^es  con- 
stamment  a  concilier,  dans  la  vue  d’nne  protection  commune, 
les  interets  souvent  opposes,  toujours  distincts,  de  l’agricul- 
ture,  de  l’industrie  et  du  commerce.  .  .  .  Je  demandefai  a 
1’ agriculture .  si  ce  n’est  pas  a  ces  lois  qu’elle  doit  et  les 
taxes  d’importation  qui  la  protegent  eontre  un  nombre  in- 
fini  de  produits  etrangers,  tels  que  les  bles,  les  bestiaux,  les 
laines,  les  garances,  les  cbanvres,  les  lins,  les  houblons,  que 
le  systeme  constant  des  tarifs  anterieurs  etait  d’attirer  par 
une  entiere  immunite,  et  les  franchises  d’exportation  qui 
ouvrent  un  facile  6coulement  h  des  produits  que  les  lois  an- 
ciennes  ne  s’etaient  jamais  appliqu^es  qu’a  retenir?  Je  de- 
manderai  a  notre  industrie  manufacturiere  si  ce  n’est  pas  dans 
ces  memes  lois  qu’elle  a  trouve  et  le  maintien  des  garanties 
que  le  travail  national  avait  prec^demment  obtenues  et  les 
garanties  nouvclles  sans  lesquelles  nos  forges,  nos  fabriques 
de  faux,  de  limes,  de  ceruse,  de  minium,  de  zinc,  et  de  cuivre 
lamin^s,  et  beaucoup  d’autres  encore,  seraient  loin  du  haut 
degr6  de  prospdrite  auquel  elles  sont  parvenues  ?  Je  deman- 
derai  enfin  au  commerce  maritime  si  ce  n’est  pas  grace  a  ces 
lois,  et  je  ne  craindrai  pas  d’ajouter,  grace  a  leur  liberate  ap¬ 
plication,  qu’il  a  pu  donner  l’essor  a  ses  armements,  protdg^s 
pour  la  premiere  fois  par  des  droits  diffdrentiels,  gradues 
suivant  le  pavilion  et  la  longueur  de  la  course,  entreprendre 
avec  s6curit6  des  speculations  lointaines,  que  les  taxes  post£- 
rieures  a  l’entreprise  out  constamment  respect^es,  jouir,  quant 
aux  entrepots,  au  transit,  au  cabotage,  et  meme  au  reglement 
des  droits,  de  toutes  les  franchises,  de  toutes  les  facility, 
de  toutes  les  exceptions  rigoureusement  compatibles  avec  l’ac- 
complissement  des  lois  g^ndrales  et  de  la  surety  des  per¬ 
ceptions  ?  ” 1 

Les  intdress^s  ne  se  payerent  pas  du  souvenir  de  bienfaits 


1  Moniteur  de  1823,  p.  155. 


LA  POLITIQUE  BE  LA  RE  ST  A  UR,  A  TI  ON. 


163 


qu’ils  avaient  pour  la  plupart  escompt^s.  Ils  en  voulurent  et 
ils  en  arracherent  d’autres,  d’abord  par  des  ordonnances ; 
puis,  sous  Charles  X.,  par  la  loi  du  17  mai,  1826,  qui  diminua 
les  droits  d’exportation,  et  aggrava  encore  dans  une  pro¬ 
portion  considerable  les  droits  d’entree  sur  la  plupart  des 
produits  agricoles.  Les  laines  brutes  dtrangCes,  par  exemple, 
qui  payaient  10  fr.  au  tarif  de  la  loi'  de  1820,  avaient  ete 
imposes  par  ordonnance  a  30  fr.  en  1823,  a  40  en  1824,  et  la 
loi  de  1826,  sanctionna  cette  derniCe  taxe :  c’Cait  en  quelque 
sorte  exclure  enticement  les  importateurs  de  nos  marches 
ruraux.  Autre  aggravation  sur  les  boeufs  qui,  maigres  ou 
gras,  payerent  50  fr. ;  meme  droit  pour  les  chevaux.  Sur  les 
couvertures  de  laine,  l’acier  fondu,  les  cordages,  les  plumes 
a  ecrire  et  d’autres  articles,  les  taxes  furent  doubiees.  Elies 
furent  quadrupiees  sur  la  plupart  des  tissus  de  fil.  Des  sur¬ 
taxes  nombreuses  furent  imposees  sur  les  marchandises  im- 
portees  par  navires  etrangers ;  des  primes  d’exportation 
accordees  aux  manufacturiers.1 

La  loi  de  1826,  compieta  le  syst^me  restrictif  de  le  Restau- 
ration.  Quelques-uns  de  ses  plus  habiles  defenseurs,  le  comte 
de  Yillele  entre  autres,  le  considCaient  “  comme  un  moyen 
temporaire,  mais  indispensable,  offert  a  la  production  fran- 
§aise,  de  se  mettre  autant  que  la  nature  des  choses  le  permet, 
en  6quilibre  avec  la  production  etrangCe.”  Mais  ces  pro¬ 
hibitions  temporaires,  loin  de  tendre  a  disparaitre,  devaient 
fatalement  se  multiplier,  s’aggraver,  se  consolider. 

Le  gouvernement  6tait  plus  sage  que  les  partis.  Toutefois, 
s’il  avait  sur  ces  questions  plus  de  lumieres  que  la  Chambre, 
parce  qu’il  Cait  moins  aveugl4  par  des  interets  particuliers,  il 
n’avait  ni  des  convictions  assez  fortes  ni  une  puissance  assez 
ind^pendante  pour  rdsister  victorieusement :  peu  des  ministres 
auraient  consenti  a  jouer  leur  portefeuille  sur  une  question  de 
douanes,  surtout  avec  tant  de  chances  de  perte.  Le  gouverne¬ 
ment  se  contentait  done  de  modCer  les  ardeurs  inconsidCCs 
des  protectionnistes,  tout  en  se  proclamant  ouvertement  le 
d6fenseur  du  syst£me.  De  temps  a  autre,  il  faisait  entendre 


1  Voir  le  Moniteur  de  1826,  pp.  177  et  807. 


164 


ECONOMIC  HISTORY . 


a  la  tribune  quelque  avertissement,  comme  le  baron  Louis  en 
1814.  Le  baron  de  Saint-Cricq  lui-meme,  dans  l’expose  des  mo¬ 
tifs  de  la  loi  du  28  avril,  1816,  s’dtait  ex  prime  avec  beaucoup  de 
mesure  :  “  Nous  aurions  moins  de  progres  a  faire,”  disait-il,  “  si 
une  trop  longue  interruption  dans  nos  relations  commerciales 
n’eut  constitue  une  prohibition  a  l’abri  de  laquelle  on  a  pu  ne- 
gliger,  sans  danger,  des  moyens  de  perfectionnement  qu’une 
heureuse  rivalitd  n’aurait  pas  manque  de  ddvelopper.”  .  .  . 
Pour  admettre  cette  rivalite,  “  nous  avons  du,”  ajoutait-il,  “at- 
tendre  que  les  temps  et  les  progres  d’une  opinion  qui  s’eclaire 
tous  les  jours  davantage  aient  resol u  cette  grande  question.” 
Malheureusement,  c’etait  liors  du  palais  Bourbon  que  les 
lumieres  se  faisaient  peu  a  peu  ;  dans  1’Assemblee,  l’evene- 
ment  prouva  que  d’ordinaire  les  interets  s’obstinent  et  ne 
s’eclairent  pas.  Ainsi  le  veut  la  nature  humaine.  Ouvrez  la 
porte  du  privilege,  la  foule  s’y  precipitera,  et  on  s’y  etouffcra 
bien  longtemps  avant  de  comprendre  que  l’on  cut  dte  plus  a 
l’aise  en  plein  air  que  dans  une  enceinte  rdservee,  mais  ou.  tout 
le  monde  a  voulu  entrer. 

Cet  encombrement  finissait  par  devenir  genant  pour  les  pro- 
tectionnistes  eux-memes,  qui  dtaient  obliges  de  rudoyer  les 
trop  nombreux  pretendants,  et  d’invoquer  contre  eux  la  the- 
orie  du  salut  public.  “  Ne  sait-on  pas,”  disaient-ils,  “  que  les 
societes  ne  subsistent  et  ne  prosperent  que  par  les  sacrifices 
individuels  ?” 1  Ils  vantaient,  et  avec  raison,  la  prospdrite 
industrielle  de  la  France  sous  le  governement  des  Bourbons  ;2 
mais  c’etait  a  tort  qu’ils  en  rapportaient  l’honneur  aux  taxes 
prohibitives.  Ils  ne  compren aient  pas  que,  sous  de  bonnes 
comme  sous  de  mauvaises  lois,  une  socidtd  peut  se  developper, 
quand  elle  a  en  elle  de  puissantes  causes  de  vitality,  et  qu’en 
pareil  cas,  les  details  de  l’administration  qu’il  ne  faut  pourtant 
jamais  dedaigner,  facilitent  ou  retardent  le  progres,  mais  sans 
l’etouffer.  Or  la  France  du  dix-neuvieme  siecle  dtait  anim^e 
par  deux  principes  sup^rieurs  qui  la  faisaient  alors  grand ir, 
malgrd  les  obtacles  :  la  science  et  la  libertd. 


1  Rapport  de  M.  Fouquier-Long,  Moniteur  de  1816,  p.  406. 

2  Sous  ses  rois  legitimes,  ce  beau  royaume  jouit  de  tous  les  bienfaits  de  la 
paix ;  chaque  jour  ses  riehesses  s’accroissent,  la  grande  masse  de  la  population 
les  partage,  le  cercle  des  jouissances  individuelles  s’etend.  —  Ibidem. 


LA  POLITIQUE  BE  LA  RES  TA  UR  A  TI  ON. 


165 


A  l’exterieur,  le  systeme  prohibitif  devait  necessairement 
amener,  comme  a  l’^poque  de  la  lutte  de  Colbert  contre  les 
Hollandais,  des  m^contentements,  et  par  suite  des  represailles 
et  des  capitulations.  La  Restauration  ceda  d’abord  devant  les 
menaces  des  Etats-Unis,  et  signa  la  convention  de  1822,  qui 
etablissait  entre  les  deux  marines  le  principe  de  la  recipro¬ 
city  ; 1  puis  elle  ceda  devant  l’Angleterre,2  et  bientdt  elle 
traita  sur  pied  d’egality  avec  les  fitats-Unis.3 

Le  spectacle  de  la  richesse  croissante,  non-seulement  en 
France,  mais  dans  la  plupart  des  Etats  de  l’Europe,  ou  la 
paix  favorisait  Lessor  des  entreprises,  avait  pourtant  stimule 
les  etudes  d’economie  politique.  L’Angleterre  commen^ait  a 
fixer  son  attention  sur  le  sort  de  classes  laborieuses,  et  Hus- 
kisson  venait  de  la  faire  resolument  entrer  dans  les  voies  de  la 
liberte  commerciale.  L’Allemagne  ecoutait  la  voix  de  List 
proclamant  les  bienfaits  d’une  union  douaniere,  et  organisait 
le  Zollverein. 

La  France,  qui  avait  eu,  au  dix-huitieme  si£cle,  le  myrite 
de  poser  avec  Quesnay  les  premiers  fondements  de  la  science 
economique,  la  retrouvait  transformee  par  Adam  Smith,  et  en 
rassemblait,  avec  J.  B.  Say,  les  elements  en  un  corps  de  doc¬ 
trine  methodique.  Le  Traite  <T Economic  Politique ,  publie 
pour  la  premiere  fois  sous  le  Consulat,  remanie  et  amyiiory 
dans  cliacune  des  editions  successives,4  rypandait  de  justes  idyes 
sur  les  lois  de  la  production  et  de  la  distribution  des  richesses, 

1  “  Art.  1.  Les  produits  naturels  ou  manufactures  des  Ltats-Unis  importes 
en  France  sur  batiments  des  Etats-Unis,  payeront  un  droit  additionel  qui  n’ex- 
eedera  pas  20  fr.  par  tonneau  de  marchandises,  en  sus  des  droits  payes  sur  les 
memes  produits  naturels  ou  manufactures  des  Ltats-Unis,  quand  ils  sont  im¬ 
portes  par  navires  fran9ais. — Art.  2.  Les  produits  naturels  ou  manufactures 
de  France,  importes  aux  Etats-Unis  sur  batiments  fran9ais,  payeront  un  droit 
additionnel  qui  n’excedera  pas  3  dollars  75  cents  par  tonneau  de  marchandise, 
en  sus  des  droits  payes  sur  les  memes  produits  naturels  ou  manufactures  de 
France,  quand  ils  sont  importes  par  navires  des  fCtats-Unis.”  —  Convention  de 
navigation  et  de  commerce  conclue  entre  la  France  et  les  Etats-Unis  le  24  juin 
1822. 

2  Traite  de  navig.  avec  l’Angleterre,  du  8  fevrier,  1826. 

3  Traite  de  comm,  et  de  navig.  du  7  juin,  1826. 

4  La  premiere  edition  est  de  1803.  Quatre  autres  editions  ont  etc  publiees, 
a  un  grand  nombre  d’exemplaires,  pendant  la  Restauration,  en  1814,  1817,  1819, 
et  1826. 


166 


ECONOMIC  HISTORY. 


et  r auteur  les  avait  lui-meme,  depuis  1819,  propagees  au  Con¬ 
servatoire  des  arts  et  metiers  dans  l’enseignement  dont  l’avait 
charge  le  comte  Decazes.1 

Non-seulement  il  montrait,  comme  Adam  Smith,  la  source 
des  richesses  dans  le  travail ;  mais  le  premier  par  une  th^orie 
neuve  2  autant  que  simple,  il  faisait  apercevoir  les  liens  de 
solidarity  qui  unissent  les  differentes  industries  et  dans  une 
meme  nation  et  entre  des  nations  diverses.  “  De  toute 
njani^re,”  disait-il  avec  la  rectitude  du  bons  sens,  “  1’ achat 
d’un  produit  ne  peut  etre  fait  qu’avec  la  valeur  d’un  autre.  — 
La  premiere  consequence  qu’on  peut  tirer  de  cette  importante 
v^rite,  c’est  que,  dans  tout  Etat,  plus  les  producteurs  sont 
nombreux  et  les  produits  multiplies,  et  plus  les  debouches  sont 
faciles,  varies,  et  vastes.  —  Une  seconde  consequence  du  meme 
principe,  c’est  que  chacun  est  intyresse  a  la  prosperity  de  tous, 
et  que  la  prospyrite  d’un  genre  d’industrie  est  favorable  a  la 
prosperity  de  tous  les  autres. — Une  troisieme  consyquence 
de  ce  principe  fecond,  c’est  que  l’importation  des  produits 
ytrangers  est  favorable  a  la  vente  des  produits  indigenes ; 
car  nous  ne  pouvons  acheter  les  marchandises  ytrangeres 
qu’avec  des  produits  de  notre  industrie,  de  nos  terres  et 

de  nos  capitaux,  auxquels  ce  commerce,  par  consyquent, 

% 

procure  un  debouch e.”  3 

Ces  principes  ytaient  bien  diffyrents  de  ceux  qu’on  pro- 
fessait  a  la  Chambre  des  Dyputys.  Us  constituaient  un 
remarquable  progres  dans  la  maniere  non-seulement  de  com- 
prendre  les  questions  commerciales,  mais  d’envisager  la 
politique  tout  entiere.  L’opposition  apparente  des  intyrets 
avait  rendu  nationale  la  haine  de  l’ytranger  et  placy  les 
peuples  vis-a-vis  les  uns  des  autres  dans  un  ytat  permanent 
d’hostility  secrete  ou  avouee ;  les  sages  eux-memes  le  pro- 
clamaient.  “Telle  est  la  condition  humaine,”  ycrivait  Vol¬ 
taire,  “  que  souhaiter  la  grandeur  de  son  pays,  c’est  souhaiter 
du  mal  a  ses  voisins.  .  .  .  Il  est  clair  qu’un  pays  ne  peut 

1  Publie  sous  le  titre  de  Cours  complet  d’ Economic  politique  pratique. 

2  Autant  que  peuvent  etre  neuves  les  observations  du  bons  sens.  Un  doge 
de  Venise  parlait  au  quinzieme  siecle  comme  J.  B.  Say  au  dix-neuvieme.  Voir 
la  lepon  d’ouverture  de  M.  Bandrillart  au  College  de  France,  annee  1866. 

3  Traits  d’Economie  politique,  edition  de  1841,  pp.  141,  144,  145. 


LA  POLITIQUE  DE  LA  RESTAURATION. 


167 


gagner  sans  qu’un  autre  perde.” 1  De  cette  opinion  d^rivait 
naturellement  la  balance  du  commerce  et  l’esprit  du  systeme 
proliibitif.  La  theorie  des  debouches  de  J.  B.  Say  ouvrait  un 
horizon  bien  autrement  large  an  commerce  et  a  la  philosophic 
politique.  Mais,  quoique  produite  a  la  tribune,  avec  beaucoup 
de  reserve,  par  quelques  orateurs  de  la  gauche,  elle  ne  pouvait 
avoir  Tagrement  de  la  majority  :  les  interets  comprennent  dif- 
ficilement  les  theories  qui  les  genent. 

Cependant  le  minist£re  Yillele,  devant  l’hostilite  manifeste 
de  la  bourgeoisie  parisienne,  avait  fait  appel  a  l’opinion  de  la 
France;  les  Elections  luiavaient  et6  contraires,  et  il  s’^tait 
retire  pour  faire  place  au  cabinet  le  plus  liberal  qui  ait  dirige 
les  affaires  sous  la  Restauration.  Martignac  crea  un  ministere 
du  commerce  et  y  appela  le  baron  de  Saint-Cricq.  C’etait 
le  moment  de  tenter  une  reforme  ;  la  gauche  appuyait  le 
cabinet,  et,  dans  son  adresse,  la  Chambre  proclama  “  que 
le  premier  besoin  de  l’industrie  et  du  commerce  etait  la 
liberty,”  Une  commission  d’enquete  fut  nommee  par  le 
gouvernement  en  1828. 2  La  conclusion,  qui  etait  loin  de 
donner  pleine  satisfaction  au  voeu  de  l’adresse,  fut  que 
“  dans  l’dtat  de  l’industrie  en  France  en  presence  des  interets 
qui  s’y  trouvent  engages,  on  doit  s’en  tenir  a  un  systeme  rai- 
sonn£  de  protection,  c’est-a-dire,  d’une  part,  proteger  efficace- 
ment  le  travail  du  pays,  et  de  l’autre,  etudier  soigneusement, 
pour  chaque  industrie,  la  quotite  de  la  protection  necessaire 
en  presence  des  dommages  que  pouvait  cr^er  une  protection 
excessive.”3  Le  baron  de  Saint-Cricq  pouvait,  comme  tout 
l’administration,  l’accepter  sans  renoncer  a  ses  propres  idees  ; 
il  d^clara  a  la  tribune  avoir  toujours  pense  et  professe  qu’il 
ne  fallait  “ni  tout  permettre  ni  tout  interdire,”  et  que,  pourvu 
qu’on  admit  le  principe  de  la  protection,  il  admettait  tr&s-bien, 
de  son  c6t£,  la  controverse  sur  la  limite  a  fixer.  Or,  le  projet 
qu’il  pr^senta,  sans  changer  l’esprit  des  tarifs,  adoucissait  les 

1  Voltaire,  Diet,  pkilos.,  \o  partie. 

2  II  y  eut  des  commissaires  dans  la  plupart  des  grandes  villes  et  pour  les 
grandes  industries.  Voir,  passim ,  le  Momteur  de  1828. 

8  Moniteur  de  1829,  p.  810.  Expose  des  motifs  par  le  baron  de  Saint-Cricq. 
Cependant  deux  enquetes  seulement  furent  faites  methodiquement  et  publiees. 
L’Enquete  sur  les  fers,  1828,  1  vol.  in-4,  et  I’Enquete  sur  les  sucres,  1828,  1  vol.  in-4. 


168 


ECONOMIC  HISTORY. 


taxes  de  certains  produits  exotiques,  et  annongait  que,  cinq  ans 
aprds  la  publication  de  la  loi,  le  droit  sur  les  fers  serait  di- 
minuti  d’un  cinquieme.  C’etait  un  commencement  de  reforme 
qui,  par -son  extreme  moderation,  avait  l’avantage  de  ne  pas 
froisser  trop  rudement  les  intdrets,  et  la  chance  d’etre  adopte. 
II  ne  fut  pas  meme  discutd.  Le  ministere  Martignac  tomba, 
et  son  successeur  se  garda  bien  de  reprendre  un  projet  des- 
agreable  a  la  droite. 

Le  systeme  prohibitif  qui  caracterise  la  legislation  douaniere 
de  la  Restaurationdemeura  intact.  Constitue  par  les  lois  de  1819 
et  de  1821  pour  les  cereales,  par  les  lois  de  1816,  de  1817,  de 
1818,  de  1820,  de  1822,  et  de  1826  pour  les  produits  de  l’agri- 
culture  et  des  grandes  fabriques,  il  s’etait  propose  comme  but 
de  rdserver  aux  seuls  producteurs  frangais  le  marcbd  frangais. 
But  bien  difficile  a  atteindre  dans  un  etat  de  civilisation  ou 
les  rapports  des  peuples  sont  si  frequents ;  impossible  et  il- 
logique,  des  qu’on  avait  en  meme  temps  la  pretention  de  favor- 
iser  et  d’etendre  le  commerce  extdricur.  Pour  reussir,  sans 
commettre  de  trop  grandes  injustices,  il  aurait  fallu  pouvoir 
isoler  la  France  comme  le  Japon  s’est  longtemps  isold  au 
milieu  de  l’Ocean  ;  le  travail  qa’on  se  plaisait  a  appeler  na¬ 
tional  aurait  seul  pourvu,  taut  bien  que  mal,  aux  besoins  des 
nationaux,  et  tous  auraient  subi  la  condition  commune.  Mais 
des  que  la  barriere  ne  s’dlevait  que  pour  quelques-uns,  il  y 
avait  necessairement  un  privilege  en  faveur  de  ceux,  quels 
qu’ils  fussent,  qui  aA^aient  le  droit,  comme  producteurs,  d’im- 
poser  leurs  marchandises  a  leurs  concitoyens  et  le  droit, 
comme  consommateurs,  de  choisir  entre  les  marchandises  de 
leurs  concitoyens  et  celles  des  strangers.  Il  devait  y  avoir, 
par  suite,  une  ardente  competition  pour  etre  admis  a  la 
jouissance  de  ce  privilege. 

Pour  assurer  a  l’interieur  Fexecution  des  lois  prohibitives, 
il  fallut  etendre  encore  a  de  nouveaux  objets  la  surveillance 
administrative,  —  ordonner,  par  exemple,  que  les  tissus  et 
tricots  de  la  nature  de  ceux  qui  etaient  prohib^s  ne  fussent 
mis  en  vente  qu’avec  une  marque  particuliere,1  prescrire  le 


1  Ord.  des  8-14  aoftt,  181G. 


LA  POLITIQUE  DE  LA  RE  ST  A  UR  A  TI  ON. 


169 


mode  de  devidage  et  d’enveloppe  de  cotons  files  en  France,1 
faire  de  visites  domiciliaires,  saisir  les  marchandises  suspectes, 
exciter  des  m4contentements  et  des  reclamations.2  Un  mal 
conduisait  a  un  autre  mal. 

II  faut  dire,  pour  mieux  faire  comprendre  les  causes  de  la 
politique  commerciale  en  France,  que  dans  toute  l’Europe  le 
vent  6tait  alors  a  la  protection.  Apres  les  rudes  secousses  de 
l’Empire,  les  nationality  s’etant  reconstitutes,  les  gouverne- 
ments  avaient  favorist  dans  une  certaine  limite  cette  tendance 
qui  semblait  assurer  leur  independance  politique,  et  chacun 
s’etait  garde  d’autant  plus  de  ses  voisins  que  les  evenements 
Favait,  quelque  temps  auparavant,  lie  plus  etroitement  a  eux. 
Partout  on  avait  repousst  les  produits  etrangers,  et  parti- 
culierement  les  produits  anglais,  dont  ^introduction  a  bas 
prix  avait  fort  dtconcerte  les  manufacturers  du  continent. 
La  France,  il  est  vrai,  avait  donne  Fexemple  aux  Pays-Bas, 
h  l’Allemagne,  a  l’Espagne ;  mais  ceux-ci  s’etaient  empresses 
de  le  suivre,  et  parfois  1’ avaient  depasse.  L’Angleterre  elle- 
meme  etait  restee,  jusqu’en  1824,  herissee  de  prohibitions, 
qu’elle  avait  meme  aggravtes  au  profit  de  ses  proprietaires 
fonciers. 

La  protection  ttait  au  pouvoir  en  Europe.  Toutefois  l’eco- 
nomie  politique,  patronne  de  la  liberte  commerciale,  lui  livrait 
deja  de  rudes  combats  dans  le  domaine  de  la  science ;  elle  tri- 
omphait  dans  le  domaine  des  faits ;  elle  donnait  Huskisson 
h  l’Angleterre  et  en  France  elle  commen§ait  a  miner,  avec  le 
double  argument  de  la  consommation  et  des  debouclies,  la 
forteresse  tlevee  par  des  inttrets  privts  et  soutenue  par  des 
prejugcs  :  mais  la  forteresse  6tait  (inergiquement  d^fendue. 

1  Loi  du  21  avril,  1818;  loi  du  26  mai,  1819;  ord.  du  16  juin,  1819;  des  1-15 
dec.  1819;  des  8-24  avril,  1829. 

2  Prenant  en  consideration  les  representations  adressees  de  la  part  d’un 
grand  nombre  de  manufacturers  et  de  marchands  de  bonneterie,  soit  sur  l’insuf- 
fisance,  en  ce  qui  les  concerne,  des  delais  precedemment  accordes,  soit  sur  les 
difficultes  qui  s’opposent  k  ce  que  la  marque  puisse  etre  separement  appliquee  St 
chacun  des  objets  provenant  de  leur  industrie.  —  Ord.  des  23-30  sept.  1818. 


170 


ECONOMIC  HISTORY . 


* 


VIII. 

THE  ZOLLVEREIN. 

From  Bowring’s  Report  on  the  Prussian  Commercial  Union, 
Parl.  Doc.  1840,  Yol.  XXI.  pp.  1-17. 

IN  compliance  with  the  instructions  which  I  had  the  honor 
to  receive  from  your  lordship,  dated  Foreign  Office,  July 
14, 1839, 1  proceed  to  report  on  the  progress,  present  state, 
and  future  prospects  of  the  Prussian  Commercial  League. 

No  doubt  this  great  Union,  which  is  known  in  Germany  by 
the  name  of  the  Zollverein ,  or  Zollverbande  (Toll  Associa¬ 
tion  or  Alliance),  derived  its  first  and  strongest  influence  from 
a  desire  to  get  rid  of  those  barriers  to  intercommunication 
which  the  separate  fiscal  legislation  of  the  various  States  of 
Germany  raised  among  a  people  whom  natural  and  national 
feelings,  as  well  as  common  interests,  would  otherwise  have 
connected  more  intimately  and  permanently  together. 

The  Zollverein  represents,  in  Germany,  the  operation  of 
the  same  opinions  and  tendencies  which  have  already  effected 
so  many  changes  in  the  commercial  legislation  of  other  coun¬ 
tries.  In  the  United  Kingdom  the  custom-house  laws  which 
separated  Scotland  and  Ireland  from  England  have  been 
superseded  by  a  general  system  applicable  to  the  whole.  In 
France  the  local  barriers  and  the  local  tariff's  have  given  way 
to  a  general  and  uniform  system  of  taxation.  Even  before 
the  Commercial  League  associated  so  many  States  in  a  com¬ 
mon  union,  several  less  extensive  combinations  had  prepared 
the  way  for  a  more  diffusive  intercourse.  Between  the  States 
which  do  not  form  part  of  the  Prussian  League  —  as,  for 
example,  between  Hanover  and  Brunswick  and  Oldenburgh, — 
the  same  tariffs  have  been  adopted,  and  the  payment  of  duties 


THE  ZOLLVEREIN . 


1T1 


in  one  of  the  States  is  sufficient  to  secure  free  sale  or  transit 
in  the  other. 

The  Commercial  League  is,  in  fact,  the  substantial  repre¬ 
sentative  of  a  sentiment  widely,  if  not  universally,  spread  in 
Germany,  —  that  of  national  unity.  It  has  done  wonders  in 
breaking  down  petty  and  local  prejudices,  and  has  become 
a  foundation  on  which  future  legislation,  representing  the 
common  interests  of  the  German  people,  may  undoubtedly  be 
hereafter  raised.  If  well  directed  in  its  future  operation,  the 
Zollverein  will  represent  the  fusion  of  German  interests  in" 
one  great  alliance.  The  peril  to  its  beneficial  results  will 
grow  out  of  the  efforts  which  will  be  made,  and  which  are 
already  made,  to  give  by  protections  and  prohibitions  an  undue 
weight  to  the  smaller  and  sinister  interests  of  the  Yerein.  But 
if  its  tariffs  be  so  moderate  and  so  judicious  as  to  allow  full 
play  to  the  interests  of  the  consumers  in  the  field  of  competi¬ 
tion  ;  if  there  should  be  no  forcing  of  capital  into  regions  of 
unproductiveness  or  of  less  productiveness ;  if  the  claims  of 
manufacturers  to  sacrifices  in  their  favor  from  the  community 
at  large  be  rejected ;  if  the  great  agricultural  interests  of  Ger¬ 
many  recover  that  portion  of  attention  from  the  commercial 
union  to  which  they  are  justly  entitled ;  if  the  importance  of 
foreign  trade  and  navigation  be  duly  estimated,  —  the  Zoll¬ 
verein  will  have  the  happiest  influence  on  the  general  prosper¬ 
ity.  And  that  the  League  has  been  much  strengthened  by  the 
experience  of  its  benefits ;  that  its  popularity  is  extending ; 
that  its  further  spreading  may  be  confidently  anticipated, 
—  appears  to  be  indubitable.  In  fact,  the  Zollverein  has 
brought  the  sentiment  of  German  nationality  out  of  the 
regions  of  hope  and  fancy  into  those  of  positive  and  material 
interests';  and  representing,  as  it  does,  the  popular  feeling  of 
Germany,  it  may  become,  under  enlightened  guidance,  an 
instrument  not  only  for  promoting  the  peace  and  prosperity 
of  the  States  that  compose  it,  but  of  extending  their  friendly 
relations  through  the  world. 

Considerations  both  of  morality  and  economy  were  not 
wanting  to  recommend  the  Commercial  Union  to  the  German 
people.  Not  only  were  the  numerous  barriers  and  various 


172 


ECONOMIC  HISTORY. 


legislation  of  tlie  German  States  great  impediments  to  trade, 
but  they  created  a  considerable  amount  of  contraband  traffic, 
and  caused  the  country  to  swarm  with  petty  smugglers,  who 
lived  upon  the  profits  which  the  varieties  of  the  tariffs  placed 
within  their  reach.  The  custom-house  administration  was 
costly,  and  generally  inefficient,  from  the  extent  of  frontier 
to  be  guarded ;  so  that  the  establishment  of  one  large,  instead 
of  a  variety  of  small  circles,  has  led  at  the  same  time  to  a 
great  diminution  of  cost  and  a  great  increase  of  efficiency, 

while  it  has  removed  from  all  the  interior  of  Germanv  that 

—  */ 

demoralizing  influence  which  the  presence  of  multitudes  of 
illicit  traders  and  smugglers  always  brings  with  it. 

The  ^ollverein  was  not,  as  it  has  been  often  asserted  to  be, 
a  union  formed  in  hostility  to  the  commercial  interests  of 
other  States  ;  it  was  not  intended  prematurely  to  create  a 
manufacturing  population  in  rivalry  with  or  opposition  to  the 
manufacturing  aptitudes  of  Great  Britain ;  it  was  by  no 
means  the  purpose  of  its  founders  to  misdirect  capital  to 
unprofitable  employment,  to  sacrifice  agriculture  to  trade, 
or  to  encourage  less  the  field  than  the  factory.  The  Zoll- 
verein  was  the  substantial  expression  and  effect  of  a  general 
desire  among  a  great  nation,  split  into  many  small  States, 
but  still  of  common  origin,  similar  manners,  speaking  the 
same  language,  educated  in  the  same  spirit,  to  communicate, 
to  trade,  to  travel,  without  the  annoyance  and  impediments 
which  the1  separate  fiscal  regulations  of  every  one  of  their 
governments  threw  in  the  way.  If,  in  the  natural  process  of 
things,  the  tariffs  of  the  Zollverein  have  become  hostile  to 
the  importation  of  foreign,  and  especially  of  British  produce, 
it  is  because  our  laws  have  prevented  the  greater  extension  of 
commercial  relations  with  Germany.  We  have  rejected  the 
payments  they  have  offered  ;  we  have  forced  them  to  manu¬ 
facture  what  they  were  unable  to  buy  ;  and  we  have  put  in 
their  hands  the  means  of  manufacturing  cheaply,  by  refusing 
to  take  the  surplus  of  their  agricultural  produce,  the  non-ex¬ 
portation  of  which  has  kept  their  markets  so  low  that  small 
wages  have  been  sufficient  to  give  great  comforts  to  their 
laborers. 


THE  ZOLLVEREIN. 


173 


There  can  be  no  doubt  that  the  hostile  tariffs  of  other 
nations,  and  especially  the  corn  and  timber  laws  of  Great 
Britain,  served  greatly  to  strengthen  the  arguments  in  favor 
of  commercial  union.  It  was  felt  necessary  to  extend  the 
home  market  while  foreign  markets  were  closed,  or  only 
partially  and  irregularly  opened,  to  the  leading  articles  of 
German  production. 

“  We  should  not  have  complained,”  says  a  distinguished 
German  writer,  in  1835,  “  that  all  our  markets  were  overflow¬ 
ing  with  English  manufactures,  —  that  Germany  received  in 
British  cotton  goods  alone  more  than  the  hundred  millions 
of  British  subjects  in  the  East  Indies,  —  had  not  England, 
while  she  was  inundating  us  with  her  productions,  insisted  on 
closing  her  markets  to  ours.  Mr.  Robinson’s  Resolutions  in 
1815  had,  in  fact,  excluded  our  corn  from  the  ports  of  Great 
Britain;  she  told  us  we  were  to  buy,  but  not  to  sell.  We 
were  not  willing  to  adopt  reprisals ;  we  vainly  hoped  that 
a  sense  of  her  own  interest  would  lead  to  reciprocity.  But 
we  were  disappointed,  and  we  were  compelled  to  take  care  of 
ourselves.” 1 

Thus,  while  on  the  one  hand,  the  Zollverein  was  advo¬ 
cated  as  a  measure  of  self-defence  against  the  hostile  legis¬ 
lation  of  foreign  nations,  it  should  not  be  forgotten  that,  as 
respects  the  confederated  States,  it  represented  the  principles 
of  unrestricted  intercommunication. 

As  between  more  than  twenty-six  millions  of  Germans,  it 
was  the  establishment  of  free  trade  ;  restrictions,  duties,  pro¬ 
hibitions,  custom-houses,  there  are  none,  as  far  as  regards  the 
various  States  that  comprise  the  Commercial  Union.  What¬ 
ever  impediments  the  tariffs  create  to  commercial  communi¬ 
cation  with  foreign  lands,  the  League  has  thrown  down  every 
barrier  which  stood  in  the  way  of  trading  intercourse  between 
the  different  branches  of  the  great  German  family,  which  the 
League  represents.  And,  as  the  conception  of  the  League  was 
popular  and  national,  so  it  cannot  be  denied  that  its  workings 
have  been,  on  the  whole ,  favorable  to  the  prosperity  and  to  the 


1  Kanke’s  “  Historisch-politische  Zeitschrif t.” 


1T4 


ECONOMIC  HISTORY. 


happiness  of  the  German  community.  Tariffs  less  hostile  to 
the  manufactures  and  foreign  commerce  of  nations  would,  as 
I  conceive,  have  greatly  added  to  the  beneficial  effects  of  the 
Union.  Jts  more  extended  communications  with  other  coun¬ 
tries  would  have  given  greater  energy,  and  opened  a  wider 
field  to  the  increased  activity  of  the  home  trade.  There  is  no 
reason  why  foreign  commerce  should  not  have  been  benefited 
to  the  same  or  even  a  wider  extent  than  internal  industry, 
by  the  overthrow  of  that  local  legislation  which  impeded  in¬ 
tercourse,  and  by  the  introduction  of  a  uniform  and  liberal 
system  of  custom-house  legislation. 

The  Zollverein  now  represents  the  interests  (well  or  ill 
understood)  of  more  than  twenty-six  millions  of  inhabitants 
of  the  most  civilized  and  opulent  parts  of  Europe,  and  has 
accomplished  one  important  result,  namely,  of  exciting  the 
attention  and  of  awakening  the  apprehensions  of  more  than 
one  neighboring  nation.  What  the  Zollverein  is  to  become 
may  depend  as  much  upon  others  as  upon  themselves ;  and, 
should  its  course  be  guided  by  enlightened  economy  and 
sound  commercial  policy,  it  may  become  an  instrument  of 
incalculable  and  boundless  good. 

Long  before  the  Zollverein  came  into  operation,  the  same 
spirit  which  led  to  its  formation  had  been  exhibited  in  various 
parts  of  Germany,  leading  to  sundry  local  and  even  national 
reforms  in  the  commercial  policy  of  the  German  States. 

Some  steps  had  been  taken  in  Prussia,  during  the  years 
1816  and  1 817,  by  sundry  ordinances  to  introduce  a  general 
and  simple  system  of  custom-house  legislation,1  and  on  the 
26th  May,  1818,  a  new  tariff  was  published,  which  is,  in  fact, 
the  groundwork  of  the  existing  arrangements.  Before  this 
period  a  different  fiscal  system  prevailed  in  different  parts 
of  the  Prussian  kingdom.  The  imposts  in  Brandenburg 
amounted  to  69  groschen  —  7s.  4 d.  per  individual;  in  Silesia 
they  were  only  22  groschen  —  2s.  3^.  The  new  law  allowed 
the  unrestricted  circulation  of  all  foreign  products  which  had 

1  See  especially  the  ordinance  of  11th  June,  1816  —  “Zur  Aufhebung  der 
Wasser-Binnen  und  Provinzialzolle  zunachst  in  den  alten  Provinzen  der 
Monarchic.” 


THE  ZOLLVEREIN. 


175 


once  passed  the  frontier,  and  the  free  transit  of  all  home  pro¬ 
ductions.  The  intention  of  this  tariff  of  1818  was  to  establish 
10  per  cent  as  the  maximum  of  protection ;  and,  had  the 
intention  of  the  Prussians  been  carried  into  effect,  there 
would  have  been  no  grounds  for  complaint. 

In  speaking  of  the  Prussian  tariff  to  the  House  of  Com¬ 
mons,  on  the  7th  May,  1827,  Mr.  Huskisson  stated  “that  the 
duties  on  the  internal  consumption  of  British  goods  are  what 
we  should  consider  very  low  upon  most  articles,  fluctuating 
from  5  to  10  per  cent  —  upon  no  one  article,  I  believe,  ex¬ 
ceeding  15  per  cent ;  ”  but  this  was  undoubtedly  an  incorrect 
view  of  things,  for  it  will  appear,  on  the  investigation  of  the 
matter,  that  the  duties  on  many  articles  of  British  manufac¬ 
ture  vary  from  20  to  100  per  cent  upon  the  value ;  and 
though  no  doubt  the  duty  (being  levied  on  the  weight)  has 
much  increased  in  ad  valorem  amounts  since  1827,  it  was, 
even  then,  from  20  to  60  per  cent  on  various  low-priced  manu¬ 
factures;  nor  was  Mr.  Huskisson  warranted  in  saying  that, 
“  in  the  whole  Prussian  tariff,  there  is  not  a  single  prohibi¬ 
tion,”  inasmuch  as  imports  of  salt  and  playing-cards  are 
wholly  prohibited,  except  for  government  account. 

The  most  important  step  by  which  evidence  was  given  of 
the  tendency  of  the  different  States  of  Germany  to  amalga¬ 
mate  their  interests  and  to  establish,  instead  of  many  tariffs, 
one  single  system,  was  the  union  of  Bavaria,  Wiirtemberg, 
Hohenzollern-Sigmaringen,  and  Hohenzollern-Hechingen,  in 
the  commercial  league  of  28th  July,  1824.  Baden,  the  two 
Hesses,  and  Saxony  were  afterwards  invited  to  join  the 
League.  The  government  of  Prussia,  alive  to  the  state  of 
public  opinion,  had  entered  by  various  treaties,  from  1819  to 
1830,  into  a  commercial  league  with  Grand  Ducal  Hesse, 
Lippe  Detmold,  and  some  smaller  states,  and  in  December, 
1826,  the  enclaves  (such  portions  of  the  territory  as  are  sur¬ 
rounded  by  another  State)  of  Mecklenburg-Schwerin,  Ripen- 
Hesseland,  Schoenberg,  Anhalt-Kothen,  Anhalt-Dessau,  Hesse- 
Homburg,  and  other  States,  joined  the  Prusso-Hessian  Union ; 
while,  in  1831,  Saxony,  Electoral  Hesse,  Saxe  Weimar,  Saxe 
Meiningen,  Saxe  Coburg,  Saxe  Altenburg,  and  other  united 


176 


ECONOMIC  HISTORY. 


themselves  to  the  Bavaro- Wurtemberg  league.  Each  of  these 
two  great  branches  naturally  sought  to  extend  its  influence, 
and  each  prepared  the  way  for  a  fusion  of  the  whole  in  one 
great  association. 

On  the  22d  March,  1838,  a  treaty  was  concluded  between 
Prussia,  Bavaria,  Wurtemberg,  Electoral  and  Ducal  Hesse; 
on  the  30th  March  of  the  same  year,  Saxony  joined  the  asso¬ 
ciation  ;  on  the  11th  of  May,  Anhalt  and  Ducal  Saxony  united, 
themselves.  The  ratifications  were  exchanged  on  the  lltli  of 
May.  This  treaty  is  the  basis  of  the  Zollverein,  or  Com¬ 
mercial  League.  It  will  be  found  at  length  in  the  Appendix 
I.  (Pari.  Doc.  pp.  73-78).  In  1835  Baden  united  itself  to  the 
League,  and  Nassau  and  Frankfort- on-the-Maine  have  also 
become  parties. 

The  first  Prusso-Hessian  Union,  taking  the  name  of  the 
Preussisch-IIessischen  Zoll  Verbande ,  comprising  many  smaller 
States,  such  as  Anhalt  Dessau,  Anhalt  Neuberg,  Saxe  Coburg 
Gotha,  Anhalt  Kotlien,  Schwarzburg  Sondershausen,  Hesse 
Homburg,  Schwarzburg  Rudolstadt,  etc.,  represented,  accord¬ 
ing  to  the  census  of  1831,  a  population  of  13,936,087  souls, 
and  contained  a  territory  of  5,278  square  German  miles. 
In  1833  it  had,  by  the  union  of  Electoral  Hesse  and  the 
increase  of  population,  augmented  the  number  of  souls  to 
14,827,418,  and  the  territory  to  5,460  square  German  miles. 
The  States  of  Thuringia,  containing  about  900,000  inhabi¬ 
tants,  had  also  their  commercial  and  toll  union  before  they 
joined  the  Prussian  League  in  1833,  while  Bavaria,  Wurtem¬ 
berg,  Saxony,  and  Baden,  brought  between  8  and  9  millions 
of  population,  and  nearly  2,500  square  German  miles  of  terri¬ 
tory  into  the  confederation. 

The  following  table  exhibits  the  population  of  the  States 
now  comprising  the  German  Custom-house  Union,  to  serve  as 
a  basis  for  the  Division  of  the  Receipts  at  Triennial  Periods : 


THE  Z  OLL  V ERE  IN. 


177 


No.  in  Order. 

Designation  of  the  States  which 
have  given  their  assent  in 
their  own  name. 

Extent  of  ter¬ 
ritorial  su¬ 
perficies  in 
square  miles. 

Extent  of 
the  Custom¬ 
house  fron¬ 
tier  in  miles. 

Population  according  to  the 
Census  agreed  upon  on 
the  31st  of  December,  in 

1834.  1837. 

1 

Prussia,  and  the  States 

which  have  come  to 
an  agreement  with 
her . 

6,1573k 

7743k 

13,692,889 

14,318,250 

2 

Bavaria . 

1,4773k 

1513k 

4,251,118 

4,319,887 

3 

Saxony  . 

2713k 

58 

1,595,668 

1,652,114 

4 

Wiirtemberg  .... 

385Tb5o 

9  10 
°100 

1,627,122 

1,667,901 

5 

Grand  Duchy  of  Baden. 

2793k 

60-5-0- 
uvi  0  0 

1,237,657 

1,264,614 

6 

Electorate  of  Hesse  .  . 

1  CO  10 
10Z1 QO 

179t2S 

1  A  40 

JL«I00 

640,674 

652,761 

7 

Grand  Duchy  of  Hesse  . 

•  •  •  • 

769,691 

791,736 

8 

Thuringian  States  .  . 

2833k 

•  •  •  • 

908,478 

931,340 

9 

Duchy  of  Nassau  .  .  . 

823k 

•  •  •  • 

373,601 

383,730 

Total  for  Division 

25,090,898 

25,982,333 

10 

Frankfort1 . 

433 

*100 

•  •  •  • 

60,000 

60,000 

Total  for  Population . 

8,2623k 

1,0643k- 

25,150,898 

26,042,333 

The  Zollverein  had  to  contend  with  a  strong  opposition  in 
its  origin,  not  only  from  some  of  the  States  whose  local  posi¬ 
tion  forced  them  into  the  union,  but  from  other  German 
States  that  continued  independent,  for  the  tariff  pressed 
equally  on  all,  not  parties  to  the  League,  whether  neighbors 
or  foreigners.  The  Prussian  tariffs  of  1818  had  been  strongly 
resisted  by  Electoral  Hesse,  Cassel,  and  other  States.  Saxony 
denounced  them  as  hostile,  nay,  fatal  to  her  manufacturing 
and  commercial  interests.  Yet  it  cannot  be  denied  that  the 
tariffs  of  1818  were  a  great  improvement  upon  the  previously 
existing  legislation,  for  they  replaced  multitudes  of  prohibi¬ 
tions  and  prohibitory  duties  by  moderate  imports.  In  1826 
the  question  of  a  union  between  Prussia  and  Hesse  Darm¬ 
stadt  was  discussed,  and  an  inquiry  was  made,  in  case  Hesse 
Darmstadt  should  unite  with  Bavaria  and  Wurtemberg, 
whether  Prussia  would  be  willing  to  entertain  the  subject 

1  The  population  of  Frankfort  is  not  taken  into  the  Division  of  the  Reve¬ 
nues,  as  this  town  receives  an  inalienable  and  invariable  sum  calculated  on  the 
basis  of  a  population  of  60,000  souls  (63,936). 

12 


178 


ECONOMIC  HISTORY. 


of  a  commercial  treaty.  The  first  answer  of  Prussia  was 
unfavorable,  but  the  difficulties  were  at  last  surmounted,  and 
the  League  before  referred  to  was  formed  between  Prussia 
and  Hesse  Darmstadt,  of  which  the  Prussian  tariff  of  1818 
was  the  basis,  the  custom-houses  between  the  two  countries 
being  wholly  removed,  —  each  State,  however,  reserved  the 
right  to  establish  duties  of  consumption  on  sundry  articles  of 
food  and  drink ;  and  Prussia  was  allowed  to  maintain  the 
monopoly  of  salt  and  playing-cards. 

The  objects  proposed  by  the  Zollverein  were  the  removal 
of  all  restrictions  to  communication  and  transit,  the  abolition 
of  all  internal  custom-houses,  the  establishment  of  a  common 
tariff  and  system  of  collection,  and  the  repartition  of  the 
receipts  on  all  imports  and  exports  according  to  the  popu¬ 
lation  among  all  the  members  of  the  League.  The  States 
reserved  to  themselves  the  right  of  introducing  any  local 
arrangements  which  did  not  interfere  with  the  general  princi¬ 
ples,  —  of  nominating  the  functionaries  of  their  own  districts, 
and  of  examining  the  accountancy  of  any  part  of  the  League. 
The  League  is  bound  not  to  interfere  with  matters  of  local 
revenue,  such  as  port-dues,  turnpikes,  tolls,  etc.  The  Prussian 
tariff  of  1818  was  recognized  as  establishing  the  maximum  of 
duties.  It  was  determined  that  a  common  system  of  moneys, 
weights,  and  measures,  should  replace,  as  soon  as  possible, 
the  various  complicated  and  discordant  usages  of  the  dif¬ 
ferent  States  of  the  union,  and  that  the  whole  influence  of 
the  union  should  be  directed  towards  the  extension  of  its 
commercial  relations  with  other  States.  The  intention  of 
the  tariff  is  to  admit  raw  materials  without  any,  or  on  merely 
a  nominal  duty.  The  lightest  duty  levied  is  on  silk  goods, 
amounting  to  110  dollars  per  cwt.,  or  about  8  shillings  ster¬ 
ling  per  lb.1  The  common  rate  of  duty  is  half  a  dollar,  or 
Is.  6d.  per  cwt.  on  all  articles  not  specially  excepted.  The 
tariff,  as  fixed  by  the  Congress  which  has  just  closed  its 
labors,  will  be  found  in  the  Appendix  II.  (Pari.  Doc.,  p.  78). 

It  would  ill  become  me,  in  this  report,  to  discuss  —  though 

1  The  duty  levied  by  the  English  tariff  on  silk  goods  is  from  11s.  to  27s.  6(/. 
per  lb. 


THE  ZOLLVEREIN. 


179 


I  cannot  pass  over  in  absolute  silence  —  the  probable  political 
consequences  of  the  establishment  of  the  Zollverein.  They 
certainly  were  not  lost  sight  of  by  its  founders.  The  intimate 
connection  between  commercial  and  political  interests  is  obvi¬ 
ous  ;  and  the  advocates  of  the  League  did  not  fail  to  perceive 
that  no  political  alliance  would  be  so  strong  as  that  based 
upon  a  community  of  pecuniary  and  social  interests.  The 
jarring  of  differently  constituted  institutions,  the  local  jeal¬ 
ousies  which  still  exert  their  influences,  the  clashing  of 
personal  and  privileged  interests  with  the  public  weal,  have 
prevented,  to  a  certain  extent,  the  fusion  which  would  other¬ 
wise  have  taken  place,  so  that  the  political  and  the  commercial 
policy  are  not  always  identified ;  but  it  cannot  be  denied  that 
under  a  wise  direction  the  machinery  of  the  Zollverein  would 
become  a  very  mighty  political  engine,  which  would  be 
brought  to  bear  with  great  power  upon  the  future  concerns 
of  Europe  and  the  world  at  large. 

The  general  feeling  in  Germany  towards  the  Zollverein  is, 
that  it  is  the  first  step  towards  what  is  called  the  Crerman- 
ization  of  the  people.  It  has  broken  down  some  of  the 
strongest  holds  of  alienation  and  hostility.  By  a  community 
of  interests  on  commercial  and  trading  questions  it  has  pre¬ 
pared  the  way  for  a  political  nationality,  —  it  has  subdued 
much*  local  feeling,  prejudice,  and  habit,  and  replaced  them 
by  a  wider  and  stronger  element  of  German  nationality. 

The  Zollverein,  by  directing  capital  to  internal,  in  prefer¬ 
ence  to  external  trade,  has  already  had  a  great  influence 
in  improving  the  roads,  the  canals,  the  means  of  travelling, 
the  transport  of  letters,  —  in  a  word,  in  giving  additional  im¬ 
pulse  to  inland  communications  of  every  sort.  The  isolation 
of  the  several  German  States,  with  separate  fiscal  interests, 
and  often  hostile  legislation,  prevented  those  facilities  from 
being  given  to  intercourse  which  are  alike  the  evidence  and 
the  means  of  civilization.  On  every  side  beneficial  changes 
are  taking  place.  Railways  are  being  constructed  in  many 
parts  of  the  German  territory,  steamboats  are  crowding  the 
German  ports  and  coasting  along  the  German  shores ;  every¬ 
thing  is  transported  with  greater  cheapness  and  rapidity. 


180 


ECONOMIC  HISTORY. 


But  whatever  opinions  may  be  formed  as  to  the  effect  of 
the  Commercial  League  upon  British  interests,  it  is  now  too 
late  to  discuss  them  beneficially.  The  League  exists,  and  is 
not  likely  to  be  broken  up ;  the  separate  interests  of  the 
different  States  are  blended  in  the  common  interests  of  the 
Zollverein ;  all  the  topics  of  comparison  between  the  general 
tariff  and  the  tariffs  which  previously  existed  in  the  various 
independent  States  of  the  union  are  now  removed ;  whatever 
existed  of  local  fiscal  influence  is  merged  in  the  common  alli¬ 
ance,  and  the  League  must  now  be  accepted  and  treated  with 
as  a  body  more  influential  than  were  any  of  its  members,  — 
capable  of  controlling  the  smaller  influences  of  its  component 
parts  by  the  concentrated  influence  of  the  whole. 

It  is  natural  that  a  body  so  powerful  as  the  Commercial 
League  should  seek  to  extend  its  influence.  More  coasts, 
more  ports,  and  more  shipping  are  the  three  desiderata  which 
are  put  forward  by  its  advocates  and  members.  For  the 
coasts  and  the  ports  of  the  Baltic  belonging  to  the  union  are 
so  much  cramped  and  prejudiced  by  the  Sound  dues  that  they 
cannot  meet,  in  any  of  the  great  emporiums  of  trade  out  of 
the  Baltic,  the  competition  of  the  ports  and  coast  south  of  the 
Baltic ;  while  the  ports,  such  as  Hamburg,  Rotterdam,  etc., 
which  are  the  natural  outlets  of  the  great  rivers  which  run 
through  the  provinces  of  the  League,  all  belong  to  States  not 
associated  with  it.  The  subject  has  been  discussed  of  giving 
a  flag  to  the  Zollverein,  as  it  has  already  a  coinage ;  but  to 
possess  a  marine,  both  warlike  and  commercial,  in  order  to 
compete  with  the  growing  squadrons  of  Russia,  and  to  be  on 
a  level  with  the  Hanse  Towns  and  with  Holland,  is  an  object 
much  insisted  on,  but  which  does  not  seem  to  present  any 
immediate  prospects  of  realization. 

On  the  30th  of  July,  1838,  an  arrangement  was  made 
(Appendix  III.,  Pari.  Doc.,  p.  95)  for  introducing  a  unity  of 
currency,  to  take  effect  from  the  1st  of  January,  1841,  the 
unity  to  consist  of  the  mark,  weighing  233  grammes. 

The  mark  to  be  represented  by  fourteen  dollars ;  the  dollar 
by  If  florins ;  and  the  florin  to  be  ^  of  a  dollar. 

The  accounts  to  be  kept  either  in  dollars  (Prussian  crowns) 
or  florins  (guilders). 


THE  ZOLLVEREIN. 


181 


Two  millions  of  pieces  of  two  dollars  each  are  to  be  coined 
before  the  1st  of  January,  1842.  The  coinage  has  already 
been  introduced ;  it  bears  the  effigies  of  the  King  of  Prussia, 
and  has  on  the  reverse  the  inscription  of  Vereins  Miinze ,  or 
“  Association’s  Money.” 

The  future  influences  and  direction  of  the  Zollverein  will 
be  determined  not  alone  by  the  growing  strength  of  the  inter¬ 
ests  it  represents,  but  by  the  direction  which  foreign  nations 
trading  with  Germany  may  be  able  or  willing  to  give  to  their 
own  commercial  legislation ;  for,  however  enlightened  may 
be  the  policy,  and  however  sincere  the  purpose,  of  the  states¬ 
men  of  Germany  to  prevent  the  League  becoming  an  in¬ 
strument  for  advancing  the  minor  interests  of  certain  classes 
of  producers,  as  opposed  to  the  major  interests  of  greater 
producers,  and  to  the  general  interests  of  the  whole  body 
of  consumers,  all  experience  shows  that  the  minor  interest, 
being  more  youthful,  vigorous,  and  concentrated,  weighs  in 
the  balance  for  much  more  than  its  real  value.  The  agricul¬ 
tural  interest,  for  example,  which  in  the  States  of  the  union 
is  the  most  diffused,  the  most  important,  and  the  most  pro¬ 
ductive,  will  not,  in  the  contest  with  the  rising  manufacturing 
interest,  obtain  its  full  share  of  power,  dependent  as  it  must 
naturally  be  to  a  great  extent  on  the  demands  of  foreign 
markets.  For  it  is  to  foreign  markets  alone  it  can  look  for 
the  sale  of  that  surplus  produce  which  home  demand  does  not 
consume,  and  which,  as  long  as  it  remains  without  vent,  must 
create  a  depression  in  the  price  of  the  whole  quantity  pro¬ 
duced.  Hitherto  the  operation  of  the  Zollverein  has  been  to 
strengthen  the  manufacturing  interest  at  the  expense  of  the 
agricultural.  As  the  foreign  demand  for  agricultural  produce 
has  been  uncertain  and  capricious,  the  low  average  prices 
have  operated,  on  the  one  hand,  in  forcing  capital  out  of 
agricultural  into  manufacturing  channels ;  while  the  cheap 
price  of  food  has  given  to  the  German  artisan  great  advan¬ 
tages  in  his  competition  with  the  labor  of  countries  in  which 
the  price  of  food  is  relatively  higher. 

Were  foreign  markets  accessible  to  the  German  agricul¬ 
turist,  there  is  no  doubt  the  flow  of  capital  towards  manu- 


182 


ECONOMIC  HISTORY. 


factures  would  be  checked,  first  by  the  increased  demand  for 
agricultural  labor,  and,  secondly,  by  the  loss  of  the  advantage 
which  the  German  artisan  now  possesses  in  the  comparative 
cheapness  of  food.  For  the  prices  of  the  countries  which 
would  be  importers  of  German  corn,  for  example,  would  deter¬ 
mine  the  prices  of  corn  in  the  German  markets  for  the  Ger¬ 
man  consumer.  In  his  own  market  he  must  give  the  same 
price  as  the  foreign  buyer  who  comes  into  that  market. 

One  of  the  great  difficulties  with  which  sound  commercial 
principles  have  had  to  contend,  in  Germany  as  elsewhere,  is 
the  too  general  adoption  of  a  phraseology  which  has  grown 
out  of  a  vicious  legislation,  and  has  to  a  great  extent  popu¬ 
larized  error.  High  duties  on  imported  articles  are  justified 
by  the  plea  that  it  is  necessary  to  afford  protection  to  the 
producer ,  while  the  substantial  fact  of  the  consequent  sacrifice 
of  the  consumer  is  wholly  kept  out  of  view.  For  one  case  in 
which  the  loss  to  the  many  is  put  forward,  there  are  a  thousand 
in  which  the  profits  to  the  feiv  are  urged  as  sufficient  sanction 
to  perverse  legislation. 

Dieterici1  gives  a  very  curious  table  (p.  127),  showing  the 
operation  of  the  Zollverein  during  the  years  1833  to  1835,  on 
imported  articles. 

On  foreign  articles  of  consumption  not  coming  into  compe¬ 
tition  with  German  articles  the  increase  in  the  three  years  is 
as  fifty-four  to  forty-six ;  in  foreign  articles  of  consumption 
competing  with  German  articles  the  decrease  is  as  twenty- 
four  to  twenty -nine  ;  in  half-manufactured  articles  serving  for 
further  labor  the  increase  is  only  from  9,161  to  9,520 ;  while 
in  wholly  manufactured  articles  the  decrease  is  from  thirteen 
to  ten.  .  .  . 

The  facilities  created  for  communication  by  the  improve¬ 
ment  of  roads,  canals,  etc.,  have  greatly  aided  the  inland 
trade  of  Germany.  At  the  close  of  the  last  war  there  were  no 

1  I  have  had  occasion  constantly  to  consult  Dieterici’s  “  Statistische  Ueber- 
sicht  der  wichtigsten  Gegenstande  des  Verkehrs  und  Verbrauchs  im  Preussi- 
schen  Staate  und  im  Deutschen  Zollverbande,  von  1831  bis  1836,  aus  amtlichen 
Quellen  dargestellt,”  Berlin,  1838.  The  valuable  facts  he  has  collected  will  be 
found  scattered  over  the  whole  of  this  report. 


THE  ZOLL  VEREIN. 


183 


roads  of  the  first  class  either  in  Pomerania,  Posen,  or  Prussia 
proper.  In  1816  the  number  of  German  miles  laid  down  in 
Chausdes  was  523f  =  2,408  English;  in  1828  it  wras  l,062|-  = 
4,889  ;  and  in  1831, 1,228-^  =  5,610  ;  and  this  amount  has  been 
greatly  increased  at  the  present  time. 

Of  the  activity  of  communication,  the  following  official 
returns  of  the  quantities  of  goods  which  passed  through  Prieg- 
nitz  will  furnish  remarkable  evidence  :  — 


Years. 

Saxony  and 
Bohemia. 

Magdeburg. 

Berlin. 

Cottbus. 

Breslau. 

Halle. 

Warsaw. 

Other  places. 

Total  in 
Cwt. 

Cwt. 

Cwt. 

Cwt. 

Cwt. 

Cwt. 

Cwt. 

Cwt. 

Cwt. 

1830  .  .  . 

246,934 

683,020 

446,.  557 

48,322 

138,813 

153,314 

1,716,963 

1831  .  .  . 

229,412 

595,610 

519,086 

45,574 

158,196 

46,988 

.  .  . 

34,088 

1,628,954 

1832  .  .  . 

246,145 

720,289 

540,246 

53,297 

147,617 

57,213 

18,489 

94,899 

1,878,199 

1833  .  .  . 

260,564 

700,858 

477,979 

32,962 

132,612 

50,948 

9,694 

80,595 

1,746,196 

1834  .  .  . 

307,087 

927,764 

755,038 

26,575 

221,623 

70,728 

11,067 

906,112 

3,225,998 

It  must  not  be  forgotten  that  Great  Britain  had  long  enjoyed 
peculiar  advantages  in  the  facilities  of  communication ;  and  to 
these  facilities  much  of  the  activity  and  success  of  her  manu¬ 
facturing  and  commercial  industry  is  attributable.  •  For  many 
years  her  progress  in  this  respect  created  almost  a  monopoly 
of  benefit ;  but  the  advantages  she  enjoyed  are  now  partici¬ 
pated  in  by  other  nations ;  and  in  Germany  especially  great 
advances  have  been  made,  and  continue  to  be  made,  in  all 
those  improvements  which  facilitate  intercourse. 

It  is  obvious  that  England  cannot  long  maintain  exclusive 
possession  of  advantages  which  civilized  man  is  everywhere 
successfully  struggling  to  obtain.  Railroads  are  now  being 
introduced  between  the  principal  towns  in  the  Zollverein, — 
those  between  Dresden  and  Leipzig  and  between  Berlin  and 
Potsdam  are  completed,  many  others  are  begun,  and  a  still 
greater  number  are  projected;  and  in  these  enterprises  the 
undertakers  have  all  the  advantages  of  our  experience.  The 


184 


ECONOMIC  HISTORY. 


number  of  canals  has  considerably  increased  ;  steamers  are 
giving  great  development  to  river  navigation ;  and  even  in 
those  branches  of  industry  in  which  our  superiority  is  the 
most  marked,  such  as  the  manufacture  of  machinery,  com¬ 
petition  is  marching  after  us  with  rapid  strides. 

But,  independently  of  the  progress  of  Germany  towards  a 
participation  in  the  advantages  which  for  a  series  of  years 
have  been  almost  exclusively  possessed  by  Great  Britain,  she 
has  aptitudes  and  facilities  of  her  own  which  must  greatly  aid 
her  in  the  development  of  her  industry.  The  frugal  and 
economical  habits  of  the  German  people  enable  them  to  pro¬ 
cure  a  far  greater  proportion  of  comforts  for  the  same  pro¬ 
portional  rate  of  wages  than  are  generally  obtained  by  the 
English  laborer ;  added  to  which  a  simpler  mode  of  life,  a 
smaller  consumption  of  animal  food,  and  a  less  costly  class  of 
garments,  leave  out  of  their  smaller  earnings  a  larger  amount 
of  savings.  Their  savings  are,  for  the  most  part,  invested  in 
the  purchase  of  the  house  in  which  they  dwell,  and  the  garden 
which  they  cultivate,  —  whose  cultivation  is  alike  a  source  of 
health,  enjoyment,  and  profit,  being  in  most  cases  a  valuable 
auxiliary  to  manufacturing  industry.  Nor  ought  the  general, 
the  almost  universal  education  of  the  population,  be  forgotten 
as  immensely  contributory  to  the  public  prosperity.  Elemen¬ 
tary  instruction  is  provided  for  all,  and  special  instruction  for 
those  who,  in  any  department  of  art  or  industry,  exhibit  any 
particular  aptitude.  I  have  given  in  the  Appendix  (IV.,  Pari. 
Doc.,  pp.  96-97),  a  short  account  of  the  Gewerbe-Schule  at 
Berlin,  which  under  the  admirable  superintendence  of  M. 
Banth  (whose  services  to  his  country  are  beyond  all  estimate, 
and  above  all  praise),  has  first  gathered  from  every  part  of 
the  kingdom  the  youths  best  fitted  for  scientific  training ;  and, 
after  a  thorough  course  of  education,  has  again  dispersed  them 
over  the  country.  The  gradual  diffusion  of  a  knowledge  and 
a  taste  for  art  over  the  whole  field  of  German  industry,  its 
happy  influence  upon  all  manufactures,  exhibited  in  a  thou¬ 
sand  evidences  of  improvement,  are  obvious  to  every  observer. 
Manual  skill  and  experience,  more  and  more  intimately  asso¬ 
ciated  with  scientific  instruction,  have  been  long  preparing 


THE  ZOLLVEREIN. 


185 


the  most  important  results ;  and  when  the  rising  generation 
of  intelligent  artisans  bring  their  information  and  taste  into 
the  wide  region  of  manufacturing  and  commercial  competi¬ 
tion,  there  can  be  no  doubt  of  their  contributing  largely  to 
the  general  wealth  and  weal. 

The  tariff  of  the  Zollverein  has  no  other  prohibitions  than 
those  of  salt  and  playing-cards,  which  are  monopolies  in 
Prussia ;  and  the  principle  of  the  tariff  is  to  admit  raw 
material,  and  materials  serving  the  ends  of  agriculture  and 
manufactures,  either  on  very  low,  or  without  any  duties. 
Thus,  raw  cotton,  wool,  coals,  pig-iron,  ores,  raw  hides,  and 
skins,  hare  and  rabbit  skins,  potashes,  common  pottery,  tur¬ 
pentine,  common  furniture,  chalk,  rags,  raw  refuse  of  sundry 
manufactures,  trees  for  planting,  manure,  earths,  fish,  grass 

and  hay,  garden  produce,  birds,  blacklead,  worn  clothes, 

* 

precious  metals,  wood,  turf,  fresh  fruit,  milk,  seeds,  etc.,  pay 
no  duties  at  all. 

The  objections  to  the  tariff  of  the  Zollverein  are  twofold; 
they  refer  to  the  amount  of  duties  levied,  and  to  the  manner 
in  which  they  are  levied. 

The  duties  are  far  higher  than  the  Prussian  government 
professed  its  intention  to  levy.  They  were  intended  to  repre¬ 
sent  the  tariffs  of  Prussia.  Now,  in  the  communication  of 
Baron  Maltzahn  to  Mr.  Canning,  dated  Dec.  25,  1825,  and 
laid  before  Parliament,  by  order  of  Her  Majesty,  in  answer 
to  the  address  of  the  House  of  Commons  of  1st  July,  1839, 
the  words  of  the  Prussian  minister  are  as  follows :  — 

“  No  one  of  the  duties  on  imports  is  sufficiently  high  to 
prevent  the  importation  of  foreign  products,  as  is  proved  by 
their  extensive  sale  in  all  parts  of  the  monarchy.  The  duties 
levied  on  the  products  of  foreign  fabrics  or  manufactures 
are  generally  only  ten  per  cent  on  their  value ;  on  some  they 
amount  to  fifteen  per  cent,  but  there  are  many  which  are 
more  moderate.” 

But  these  representations  are  certainly  not  borne  out  by 
facts ;  for,  not  only  do  the  duties  levied  on  manufactures  vary 
from  twenty  to  eighty  per  cent  (instead  of  from  ten  to  fifteen 
per  cent),  but  there  are  great  varieties  of  goods  which  are 


186 


ECONOMIC  HISTORY. 


wholly  excluded  from  the  Prussian  markets  in  consequence 
of  the  elevation  of  the  tariff. 

The  manner  in  which  the  duties  are  levied  is  such  as  to 
press  most  severely,  with  reference  to  their  cost,  on  coarse, 
inferior  and  heavy  articles ;  those  least  able  to  bear  a  high 
rate  of  duty  are  most  imposed,  the  same  amount  of  duty  being 
taken  on  all  species  of  goods  made  of  the  same  raw  material, 
—  the  finest  qualities  pay  the  least,  and  the  lowest  qualities 
the  highest  amount.  The  ad  valorem  principle,  which  is  in 
its  nature  the  fairest,  because  it  distributes  taxation  by  the 
measure  of  wealth  and  expenditure,  is  wholly  lost  sight  of, 
and  the  goods  employed  by  the  poor  are  visited  by  a  much 
heavier  rate  of  taxation  than  those  by  the  opulent.  The 
richest  muslin  and  the  coarsest  calico,  the  cloth  of  Sedan  and 
the  serge  of  Devon  pay  the  same  amount  per  cwt.  Hence 
articles  of  low  quality  —  such  as  are  used  by  the  many,  such 
as  would  have  the  largest  sale  —  are  wholly  excluded  from 
the  markets  of  the  League. 

It  cannot  be  disputed  that  the  ad  valorem  system,  as  applied 
to  manufactures,  has  many  inconveniences  and  difficulties.  It 
is  not  easy  always  to  ascertain  even  the  approximative  value  ; 
and  with  the  number  of  custom-houses  by  which  goods  are 
allowed  to  be  imported  through  a  frontier,  both  of  sea  and 
land,  so  various  and  extensive  as  that  of  the  Commercial 
League,  it  would  be  out  of  the  question  to  seek  for  a  sufficiency 
of  custom-house  functionaries,  with  knowledge  and  experience 
competent  to  the  protection  of  the  revenue  against  fraud. 
There  is  no  system  so  simple  as  that  of  weight ;  it  is  intelli¬ 
gible  to  everybody ;  it  is,  too,  a  generally  popular  system,  as 
it  affords  no  latitude  for  the  caprice  of  the  officer,  and  opens 
no  door  to  the  frauds  of  the  importer.  It  might  probably 
be  associated  with  some  classification  of  articles,  if  not  too 
detailed  or  complicated,  into  a  few  great  divisions ;  but  the 
desirableness  of  a  thorough  change  in  the  system  itself  may 
well  be  doubted,  and  such  a  proposal  is  not  likely  to  be 
entertained. 

The  Americans  have  strongly  objected  to  the  system  of 
levying  duties  by  weight,  instead  of  on  value.  They  have 


THE  ZOLLVEREIN. 


187 


represented  that  the  duty  of  5J  dollars  on  their  tobacco,  being 
the  same  as  that  levied  on  the  tobaccos  of  the  Havana  and 
the  Spanish  colonies,  is,  in  fact,  a  discriminating  duty  on 
their  produce,  even  to  the  extent  of  two  hundred  to  three 
hundred  dollars  per  cent.  They  complain  that  while  the 
duties  in  the  United  States  on  the  articles  imported  from 
Germany  do  not  upon  the  whole  amount  pay  more  than  an 
average  of  5§  per  cent,  the  imports  from  the  United  States 
into  the  Zollverein  pay  forty-six  per  cent  duty.  They  re¬ 
present  that  -Prussia  levies  on  American  produce  a  gross 
revenue  of  776,606  dollars ;  and  while  the  United  States 
receive  only  159,668  dollars  from  imports  of  the  Zollverein. 
Of  about  four  millions  of  dollars  exported  from  the  Com¬ 
mercial  League  to  the  United  States  three  millions  (one  and 
one-half  millions  of  linens,  one  million  of  silk,  and  half  a  mil¬ 
lion  merino  and  other  similar  articles)  pay  no  duty  at  all. 
The  remaining  million  is  principally  composed  of  glass,  hard¬ 
ware,  hosiery,  etc.,  paying  from  twenty  to  twenty-five  per 
cent. 

The  original  intention  of  the  Prussian  tariff  has  certainly 
been  much  departed  from,  and  the  general  principle  which 
was  put  forward  has  not  been  carried  out  in  its  details.  For 
not  only  did  the  Prussian  government,  in  its  official  corre¬ 
spondence,  declare  that  it  was  its  purpose  not  to  lay  duties 
exceeding  from  ten  to  fifteen  per  cent,  but  the  Commercial 
League  itself  professed  to  make  the  Prussian  tariff  tho  basis 
of  the  legislation  of  the  union;  and  the  maximum  intended 
to  be  established  by  the  Prussian  tariff  was  an  ad  valorem 
ten  per  cent  on  manufactures ;  for  that  tariff  provides  that 
“The  duty  on  consumption  in  foreign  fabrics  and  manufac¬ 
tured  goods  shall  not  exceed  ten  per  cent;  and  it  shall  be 
less,  whenever  a  smaller  duty  can  be  imposed  without  injury 
to  the  national  industry.”1  But  the  duties  levied  being,  on 
cotton  manufactures,  £7  10s.  per  cwt.;  on  woollens,  <£4  10s.; 
on  hardware,  £8  5s.;  on  common  linens,  33s.;  on  fine  linens, 
£3  6s.;  and  on  silks,  £16  10s.,  per  cwt.,  —  do,  on  the  whole, 


1  “  Allgemeine  Zeitung,”  2d  December,  1834. 


188 


ECONOMIC  HISTORY. 


greatly  exceed  the  proposed  ten  per  cent.  The  system  of 
imposing  the  duty  by  weight  has  the  advantage  of  great  sim¬ 
plicity,  but  it  acts  in  complete  hostility  to  the  ad  valorem 
principle,  as  the  duty  increases,  instead  of  diminishing,  with 
the  lowness  and  coarseness  of  the  article ;  so  that  the  oper¬ 
ation  of  the  tariff  is  as  complete  an  exclusion  of  every  low- 
priced  manufacture  as  if  it  were  absolutely  prohibited.  Under 
the  influence  of  this  state  of  things,  the  duty  on  cotton  goods 
varies  from  three  and  one  half  to  one  hundred  and  twenty 
per  cent. 

It  has  been  remarked  that  this  system  fails  in  the  very  ends 
proposed,  namely,  to  distribute  the  amount  of  protection  in 
proportion  to  the  backwardness  of  the  manufacture.  On  cer¬ 
tain  articles  the  amount  of  duty  is  so  heavy  as  completely  to 
exclude  foreign  competition,  where  the  home  production  re¬ 
quires  no  such  encouragement  as  that  afforded  by  the  tariff ; 
and  on  others,  where  a  protecting  duty  is  required  by  the  con¬ 
dition  of  the  home  production,  the  duty  on  the  foreign  article 
is  small,  and  insufficient  to  check  its  introduction.  But  the 
general  result  of  the  tariff  is  to  exclude  the  foreign  articles  of 
low  quality  and  general  consumption,  and  thus  to  keep  the 
lar^e  demand  exclusivelv  for  the  home  manufacturers.  One 
baneful  effect  is,  however,  that  the  increased  price  is  levied 
on  those  who  are  least  able  to  pay,  and  levied  on  articles  of 
the  lowest  value,  for  the  piece  goods  which  are  consumed  by 
the  opulent  are  precisely  those  upon  which  the  smallest  amount 
of  duty  is  collected. 

It  has,  indeed,  been  argued  that  the  levying  heavy  duties 
upon  manufactures  of  ordinary  quality,  so  as  to  exclude  them 
from  the  markets  of  the  league,  is,  in  fact,  to  create  a  demand 
for  superior  articles,  and  so  confer  a  benefit  upon  the  German 
consumer ;  but  to  the  immense  multitude  of  consumers,  cost 
is  the  all-important  consideration ;  and  to  deny  access  to  low- 
priced  articles  —  or  by  prohibitory  duties  on  foreign  fabrics, 
considerably  to  elevate  the  price  of  the  home-made  article  — 
is,  in  all  cases,  to  levy  an  unfair  and  unequal  contribution  on 
the  poor,  and  in  many  cases  wholly  to  exclude  them  from  the 
enjoyment  of  what  would  otherwise  be  accessible  to  them.  In 


THE  ZOLL  VERB  IN. 


189 


fact,  to  exclude  the  ordinary  manufactures  of  foreign  countries 
is  to  give  a  special  premium  to  the  production  of  ordinary 
manufactures  at  home,  is  to  create  for  the  least  advanced, 
the  least  intelligent  industry,  a  field  of  peculiar  favor;  and 
it  may  be  well  doubted  if  the  monopoly  thus  established  for 
the  manufacture  of  low  articles  is  beneficial  to  them.  That 
it  is  prejudicial  to  the  consumers  is  obvious,  but  some  of  the 
ablest  writers  on  the  Zollverein  have  expressed  their  convic¬ 
tion  that  the  uncontrolled  power  given  to  the  German  manu¬ 
facturer  of  low  articles  in  the  German  market  is  baneful  as 
well  to  his  own  as  to  the  public  interest.1 

The  tendency  of  opinion  in  Germany  is  towards  free  trade. 
Almost  every  author  of  reputation  represents  the  existing 
system  as  an  instrument  for  obtaining  changes  in  favor  of 
commercial  liberty.  One  of  the  most  distinguished  writers 
on  the  Commercial  League,  in  cautioning  the  capitalist  from 
embarking  his  wealth  in  the  protected  branches  of  industry, 
says,  u  You  are  building  ships  which  are  not  prepared  for  the 
storm.  You  are  creating  interests  which  cannot  make  their 
way  through  a  crisis;  you  are  erecting  edifices  upon  sand.”2 

It  should  be  borne  in  mind,  however,  that  the  tariffs  of  the 
Zollverein  are  far  more  liberal  than  the  old  tariffs  of  Prussia, 
which  were  intended  wholly  to  exclude  foreign  manufactures. 
But  diminished  duties  have  not  injured  her  own  manufactures. 
No  man  is  found  to  deny  that  they  have  made  a  much  greater 
progress  under  a  less  protection  than  they  made  when  the 
home  market  was,  by  a  greater  protection,  closed  against  for¬ 
eign  competition. 

The  Prussian  tariff  of  1818  was  a  great  improvement  on 
preceding  legislation,  but  it  contained  many  incongruities, 
which  were  changed  by  the  tariff  of  1822.  On  many  articles 
the  duties  varied  between  the  eastern  and  western  provinces. 
Common  cloths,  which  paid  26  rix-d.  22 \  gr.,  and  fine  cloths 
paying  47  rix-d.  10J  gr.  in  the  eastern  provinces,  paid  only 
22  rix-d.  18|  gr.,  and  43  rix-d.  7J  gr.  in  the  western;  cotton 

1  See  Osiander,  “  Betrachtungen  iiber  den  Zoll  Preussischen  Tarif.”  Stut- 
gart,  1837,  pp.  89,  90. 

2  See  Osiander,  “  Betrachtungen,”  p.  97. 


190 


ECONOMIC  HISTORY. 


twist  paid  2  rix-d.  10  gr.  in  the  eastern,  and  only  half  that 
amount  in  the  western  provinces ;  while  dyed  twist  paid 
6  rix-dr  17 \  gr.  in  the  former,  and  5  rix-d.  17  J  gr.  in  the 
latter.  White  and  colored  woven  cottons  and  cottons  mixed 
with  thread  paid  the  same  duties  as  fine  woollens,  namely, 
47  rix-d.  10|  gr.  and  43  rix-d.  7J  gr. ;  and  printed  and  fine 
cottons,  61  rix-d.  3J-  gr.  in  eastern,  and  57  rix-d.  in  western 
districts;  gray  linens  2  rix-d.  and  1  rix-d.  22J  gr.,  and 
bleached,  12  rix-d.  6|  and  8  rix-d.  8^  gr. ;  silks,  171  rix-d. 
3J  gr.  in  the  eastern,  and  167  rix-d.  in  the  western  depart¬ 
ment;  half  silks,  79  rix-d.  13  J  gr.,  and  75  rix-d.  10  gr. 
Common  iron  goods  paid  6  rix-d.  17 \  gr.  in  the  east,  and 

5  rix-d.  2J  gr.  in  the  west ;  fine  iron  goods,  24  rix-d.  12J  gr., 
and  20  rix-d.  10  gr. ;  and  cutlery  and  fine  hardware,  79  rix-d. 
13 J  gr.,  and  75  rix-d.  10  gr.  The  tariff  of  1822  left  the 
distinction  only  existing  on  cotton  twist ;  introduced  a  uni¬ 
form  duty  of  30  rix-d.  on  woollens,  and  6  rix-d.  on  dyed  twist; 
50  rix-d.  on  cottons  generally,  but  reduced  the  duty  on  cot¬ 
tons  mixed  with  thread  to  10  rix-d.,  which  it  also  levied  on 
bleached  linens ;  lowered  the  duties  on  silks  to  100  rix-d., 
and  on  half-silks  to  50  rix-d. ;  on  common  iron  goods  levied 

6  rix-d.;  on  fine,  10  rix-d.;  and  on  cutlery  and  hardware, 
50  rix-d. 

Thus  the  tariff  of  1822  was  in  every  respect  an  improve¬ 
ment  on  that  of  1818.  In  1825  the  duties  on  woollen  warps 
were  reduced  from  30  rix-d.  to  10  rix-d.;  and  those  on  car¬ 
pets  of  wool  and  thread  from  30  rix-d.  to  20  rix-d. ;  those  on 
fine  linens  and  cottons  mixed  with  flax  were  raised  from 
10  rix-d.  to  20  rix-d.  In  1828  the  duties  on  flannels,  mol- 
tons,  etc.,  were  reduced  from  30  rix-d.  to  10  rix-d.,  and  on 
woollen  carpets  from  30  to  20  rix-d. 

Up  to  this  period  half  the  duty  was  payable  in  friederichs 
d'or,  which  was  an  augmentation  of  about  six  per  cent  upon 
the  tariff.  In  1832  the  duty  on  woollen  yarn  was  lowered 
from  6  rix-d.  to  15  silver  gr. ;  on  carpets  in  general  it  was 
lowered  from  30  rix-d.  to  22  rix-d. ;  on  woollens  it  was  raised 
from  30  rix-d.  to  33  rix-d. ;  on  cotton  yarns  2  rix-d.  were 
established  as  a  general  duty ;  55  rix-d.  on  cottons  and  cut- 


THE  Z0LLVERE1N. 


191 


lery,  instead  of  50,  which  50  continued  to  be  levied  on  cotton 
and  flax  manufacturers ;  and  the  duties  on  silk  were  raised 
from  100  rix-d.  to  110  rix-d.  The  tariff  of  the  Zollverein, 
in  1831,  reduced  the  duty  on  carpets  from  32  rix-d.  to 

20  rix-d.;  and  on  woollens  generally  from  33  rix-d.  to 

.30  rix-d.;  on  cottons  from  55  rix-d.  to  50  rix-d.  The  duty 
on  linen  thread  was  raised,  in  1837,  from  6  rix-d.  to  8  rix-d. ; 
and  on  twisted  cotton  to  the  same  amount.  The  tariff  of 
1840  has  lowered  the  duties  on  cutlery  and  hardware  from 
55  rix-d.  to  50  rix-d. 

The  changes  introduced  by  the  Congress  of  1839  into  the 
tariffs  of  1837-39,  are  not  very  considerable.  The  adoption 
of  the  unity  of  50  kil.  as  the  cwt.  of  the  tariff,  operates  as 

an  elevation  of  per  cent,  in  all  cases,  when  it  applies  to 

articles,  the  duty  on  which  is  charged  by  weight,  as  is  the 
case  with  the  major  part  of  the  goods  mentioned  in  the  tariff. 
The  system  of  tarification  has  been  simplified  throughout  by 
the  cutting  off  all  fractions  of  lbs.  The  most  important 
change  is  the  reduction  of  the  sugar,  rice,  and  hardware  du¬ 
ties.  .  .  .  The  standard  of  the  florin  is  altered  from  24  gold 
standard  to  24J  gold  standard ;  so  that,  under  the  new  tariff, 
the  rix  dollar  is  now  represented  by  If  fl.,  instead  of  If,  as 
in  the  former  tariff.  Thus,  the  general  rate  of  import  duty 
(when  there  is  no  special  exception)  was,  in  1837-39,  one- 
lialf  Prussian  dollar,  or  15  silver  gr.,  represented  by  50  kreut- 
zers ;  but  at  present  the  general  import  duty  of  one-half 
Prussian  dollar  is  represented  by  52i  krs. 

Attached  to  the  custom-house  tariff  will  be  found  the  va¬ 
rious  regulations  under  which  the  transit  duties  are  leAfied  in 
the  States  of  the  Prussian  Union. 

The  legislature  of  Prussia  has  generally  made  the  transit 
of  goods  through  her  provinces  a  source  of  revenue ;  and  it 
has  not  been  wholly  unproductive,  as  a  large  portion  of  Po¬ 
land  and  southern  Russia  import  and  export  through  the 
Prussian  ports  in  the  Baltic.  The  difficulties  which  Russian 
legislation  has  always  thrown  in  the  way  of  transit  may,  per¬ 
haps,  have  had  some  influence  on  the  councils  of  Prussia ;  in 
fact,  the  heavy  transit-duty  imposed  on  goods  imported  through 


192 


ECONO  Ml  C  HIS  TOR  Y. 


the  ports  of  the  Baltic  could  hardly  be  maintained  were  the 
Prussian  transit-system  a  wise  and  liberal  one.  The  South¬ 
ern  States  of  the  union  have,  for  the  most  part,  endeavored 
to  secure  through  their  territories  a  cheap  transit  for  com¬ 
modities  intended  for  other  countries.  The  general  princi¬ 
ples  of  the  transit  law  are,  that, — 

1.  All  articles  admitted  without  duty  shall  transit  without 
duty  through  the  Zollverein. 

2.  All  articles  upon  which  the  export  and  import  duties, 
separate  or  together,  do  not  amount  to  i  dol.  or  52i  kr.  per 
cwt.,  are  to  pay  the  amount  of  the  said  duties. 

3.  All  articles  upon  which  the  export  and  import  duties 
exceed  J  dol.,  or  52J  kr.  per  cwt.,  shall  pay  on  transit  i  dol. 
per  cwt. 

But  there  are  many  exceptions.  The  exceptional  transit 
duties  levied  by  the  tariffs  of  the  Zollverein  are  :  On  cotton 
and  other  goods,  coming  or  going  through  Baltic  ports,  4  dol. 
(12s.)  per  cwt. ;  through  other  roads,  2  dol.  (6s.)  per  cwt. ;  on 
cotton  twist  and  dyed  woollen  yarn,  2  dol. ;  on  copper,  coffee, 
etc.,  1  dol.  per  cwt. ;  on  raw  sugar,  20s.  gr.  (2s.). 

But  goods  going  from  the  Oder  mouth  on  the  left  bank  of 
the  Oder,  westward,  towards  the  Rhine,  and  through  the 
frontier  between  Neu-Benin,  in  Silesia,  to  Thorn,  in  Bavaria ; 
or,  entering  the  right  bank  of  the  Rhine  again,  to  traverse 
the  Rhine  for  export,  cottons,  woollens,  and  many  other 
articles,  1  dol.  (3s.)  per  cwt. 

Goods  conveyed  by  the  left  bank,  or  on  the  Rhine,  or  on 
the  Moselle,  and  over  the  southern  frontier  between  Hamburg 
and  Freilassing,  or  over  the  northern  frontier  between  the 
Rhine  and  the  Elbe,  10  sq.  (Is.)  per  cwt. 

Goods  conveyed  over  the  southern  frontier,  or  from  the 
Rhine  to  the  Danube,  sq.  (5£d.)  per  cwt. 

The  details  will  be  found  in  the  Appendix  (III.  Pari.  Doc. 
p.  95)  attached  to  the  Tariff. 

The  transit  system  of  the  Zollverein  is  somewhat  compli¬ 
cated,  and  inconsistent  with  the  general  and  simple  character 
of  the  legislation.  The  tables  in  the  Appendix  (V.  Pari.  Doc. 
pp.  99-112)  will  exhibit  the  amount  of  goods  passing  through 


THE  ZOLL  V  ERE  IN. 


193 


the  various  provinces  of  the  League.  One  general  transit 
duty,  of  low  amount,  would  certainly  be  very  favorable  to  the 
carrying  trade  of  the  union  ;  nor  are  the  reasons  quite  ob¬ 
vious  why,  in  the  recognition  of  a  principle  of  equality,  the 
conveyance  of  goods  through  certain  States  of  the  union 
should  be  loaded  with  much  heavier  fiscal  charges  than 
through  others.  It  would  seem  more  accordant  with  sound 
principles  to  encourage  transit  through  the  districts  which 
geographically  present  the  greatest  facilities,  rather  than  to 
give  advantages,  by  lower  duties,  to  districts  less  conveniently 
situated. 

Perhaps  the  wisest  course,  in  the  common  interest  of  the 
Zollverein,  would  be  to  completely  disassociate  all  fiscal  con¬ 
siderations  from  the  question  of  transit,  and  to  levy  no  other 
duty  than  is  necessary  for  paying  the  expenses  of  collection 
and  control.  The  prohibitory  tariffs  of  Russia,  Poland,  and 
Austria,  certainly  require  no  new  charge  or  impediment  to  be 
added  by  a  heavy  transit  duty  to  the  cost  of  the  articles  im¬ 
ported  through  the  States  of  the  League.  And,  even  with  the 
high  rate  of  duty  levied  (or  perhaps  rather  on  account  of  the 
high  rate  of  duty  levied),  the  pecuniary  interest  to  preserve 
the  present  system  is  small, — far  too  small  to  counterbalance 
the  disadvantages  and  detriments  which  the  system  creates. 

Another  obvious  inconvenience  and  loss  accrues  to  the  Zoll¬ 
verein  from  the  motives  which  the  lower  transit  dues  of 
France,  Holland,  and  Belgium  create  for  transporting  goods 
through  the  ports  of  those  countries  instead  of  the  ports  of 
Germany ;  added  to  which,  a  habit  of  forwarding  articles  by 
a  particular  line  creates  new  interests  and  motives,  which 
make  it  difficult  to  revert  to  a  former  state  of  things.  When 
business  has  been  forced  out  of  its  natural  channel  into  a 
novel  course  it  does  not  promptly  resume  its  old  direction, 
and  the  ground  lost  is  often  not  again  to  be  won. 

The  lowest  transit  duty  levied  in  the  Zollverein,  with  the 
exception  of  the  road  from  Mayence  to  the  southern  frontier, 
is  4J  silver  gr.  (5JcL)  per  cwt. ;  but  on  the  main  roads  of 
Austria  transit  is  free  from  charge,  while  in  France  the  charge 
is  less  than  half  the  amount  of  the  minimum  Prussian  duty. 

13 


194 


ECONOMIC  HISTORY. 


At  the  same  time,  the  advantages  which  the  railroads  of 
Belgium  offer,  and  the  free  navigation  of  the  principal  rivers 
of  Germany,  as  established  by  the  Vienna  Congress,  would 
all  seem  to  co-operate  in  showing  how  much  it  is  for  the  in¬ 
terest  of  the  League  to  facilitate  transit  by  every  possible 
means.1  The  attention  which  has  been  of  late  years  so  suc¬ 
cessfully  given  in  Germany  to  the  improvement  of  the  roads, 
and  all  other  means  of  communication,  cannot  receive  a 
greater  recompense  than  by  encouragement  given  to  the  tran¬ 
sit  trade  by  a  low  rate  of  duty  levied.  The  profits  deposited 
by  the  transport  of  merchandise,  are,  from  their  diffusion,  apt 
to  escape  attention  ;  but  perhaps  there  are  none  which  give  a 
greater  activity  to  agricultural  industry,  nor  which  are  more 
intimately  connected  with  the  public  prosperity  and  the  gen¬ 
eral  progress  of  improvement  and  civilization. 

There  is  considerable  difficulty  in  estimating  the  amount  ' 
of  the  imports  from  Great  Britain  into  the  States  of  the  Zoll- 
verein,  as  they  penetrate  through  so  many  channels,  —  not 
only  through  German  ports,  but  from  the  ports  of  Holland 
and  Belgium  and  the  ILanse  Towns.  From  Hamburg  and 
the  Elbe  especially  a  large  part  of  the  wants  of  the  Verein 
are  supplied ;  there  are  also  large  importations  through  Rot¬ 
terdam  and  the  Rhine,  as  well  as  through  Bremen  and  the 
Weser.  But,  by  a  comparison  of  the  returns  of  our  imports 
from  and  exports  to  the  various  circumjacent  countries, 
which  have  been  prepared  with  bis  accustomed  accuracy  and 
diligence  by  Mr.  Young  (Appendix  VI.  to  IX.  Pari.  Doc. 
pp.  113-139),  with  the  very  detailed  statements  given  me  by 
the  Prussian  government,  all  of  which  documents  will  be 
found  in  the  Appendix  (XI.  to  XVII.,  Pari.  Doc.  pp.  143- 
226),  an  approximate  estimate  of  the  general  amount,  and 
of  the  special  details  of  our  commercial  intercourse  will  be 
obtained. 

Though  the  strong  and  irresistible  tendency  of  an  organ¬ 
ization  like  that  of  the  Commercial  League  is  to  blend  the 
separate  interests  of  its  component  parts  into  the  common 


1  Osiander,  pp.  115-117. 


THE  Z  OLL  V ERE  IN. 


195 


and  paramount  interests  of  the  whole,  and  to  give  to  the 
Union,  as  a  body,  an  influence  sufficiently  powerful  to  pre¬ 
dominate  over  the  local  and  partial  influences  of  the  various 
elements  of  which  that  Union  is  composed,  still  much  time 
and  much  judicious  legislation  will  be  required,  in  order  that 
the  Union  may  fairly  represent  the  various  interests  which 
are  comprehended  in  its  action.  Happily  the  greater  interests 
are  and  must  long  continue  intimately  connected  with  the 
foreign  trade  of  Germany,  —  for  though  the  manufacturing 
tendencies  of  a  portion  of  the  States  of  the  Union,  associated 
as  such  tendencies  are  with  a  restless  activity,  —  a  spirit  of 
association,  a  unity  of  purpose,  a  combined  action,  which  give 
them  more  than  their  fair  and  full  importance  in  the  struggle 
for  what  is  called  “  protective  legislation,”  yet  it  cannot  be 
denied  that  there  is  in  Germany  such  a  general  diffusion  of 
intelligence  as  will  check  the  sinister  interests  in  their  de¬ 
mand  for  prohibitory  duties  on  foreign  manufacture.  And  at 
the  present  moment  the  agricultural  interests,  taking  in  the 
whole  of  the  confederated  States,  represent  a  vastly  greater 
amount  of  capital  and  labor  than  the  manufacturing.  The 
agricultural  interest  exists  everywhere  and  in  many  extensive 
provinces  of  the  Union  without  any  counterbalancing  manu¬ 
facturing  interest,  while  the  manufacturing  interest  is  to  a 
great  extent  of  modern  growth,  and  confined  to  a  limited 
portion  of  the  field  of  production.  And  even  that  manufac¬ 
turing  interest  can  only  safely  rest  upon  a  system  of  moderate 
duties ;  for  as  soon  as  it  is  able  to  supply  the  markets  of  Ger¬ 
many,  it  must,  for  its  surplus  produce  be  thrown  into  compe¬ 
tition  with  the  manufacturers  of  other  lands,  and  can  only 
compete  successfully  by  cheap  production,  to  which  a  protec¬ 
tive  and  prohibitory  system  is  in  its  very  nature  opposed  ;  for 
its  object  and  its  essence  are  to  promise  and  to  secure  high 
prices  to  the  home  manufacturer.  And  if  the  interest  of 
Prussia  for  example  be  considered,  —  Prussia,  whose  popula- 
lation  comprises  two  thirds  of  the  whole  population  of  the 
Commercial  Union,  —  it  is  certain  that  not  only  are  her  true 
interests  hostile  to  any  system  which  prohibits  the  introduc¬ 
tion  of  foreign  manufactures,  her  capital  engaged  in  manufac- 


196 


ECONOMIC  HISTORY. 


tares  being  inconsiderable  ;  but  the  general  conviction  of  the 
heads  of  departments  in  Prussia  is  opposed  to  a  protecting 
legislation. 

The  financial  necessities  of  Prussia  have  frequently  been 
put  forward  as  the  reason  for  the  high  rate  of  duties  estab¬ 
lished  by  the  tariff  of  the  Zollverein  ; 1  but  it  is  clear  that 
many  of  the  rates  are  far  too  high  to  be  productive ;  some  of 
them  are  wholly  prohibitory  ;  and  the  revenue  would  certainly 
be  benefited  by  a  considerable  reduction.  The  Zollverein, 
however,  has  never  been  regarded  by  the  contracting  States 
with  a  view  solely  to  the  financial  question ;  its  social  and 
political  consequences  would  reconcile  many  of  its  members 
even  to  considerable  pecuniary  sacrifices.  .  .  . 


LE  ZOLLVEREIN. 

( Resume  Statistique.) 

From  Legoyt’s  La  France  et  l’Ltranger,2  Vol.  I.  pp.  250-5. 

LE  ZOLLVEREIN  (des  deux  mots  allemands  Zoll , 
douane,  et  Verein ,  association)  est  le  nom  donn<3  <\ 
l’association  douaniere  qui  existe  aujourd’hui  entre  tous  les 
membres  de  la  Confederation  germanique,  moins  rAutriche, 
les  trois  villes  Ans^atiques  (Breme,  Hambourg,  et  Llibeck), 
le  Mecklembourg,  les  duch^s  de  Holstein  et  du  Lauenbourg, 
et  la  principality  de  Lichtenstein.  La  Prusse  y  figure  meme 
pour  ses  provinces  placdes  en  dehors  de  la  Confederation. 

Le  principe  de  cette  association  se  trouve  dans  l’article  19  du 
traite  qui  a  fonde  la  Confederation  germanique  et  qui  est  ainsi 
coiiqu  :  “  Ses  membres  se  reservent,  a  la  premiere  reunion  de 
leurs  pienipotentiaires  a  Francfort,  de  deliberer  sur  un  projet 

1  Osiander. 

2  Paris :  Veuve  Berger-Levrault  et  fils,  18G5. 


LE  ZOLLVEREIN. 


197 


de  douanes  et  de  navigation  pour  toute  l’Allemagne.”  Mais 
elle  trouvait  surtout  sa  raison  d’etre  dans  1’organisation  terri- 
toriale  et  politique  de  l’Allemagne,  composee  de  quarante  Etats 
presque  tous  enclaves  les  uns  dans  les  autres,  ayant  chacun 
ses  barrieres  fiscales  et  son  tarif.  On  a  comte  que,  pour  par- 
venir  de  la  frontiere  au  centre  du  pays,  soit  du  nord  au  sud, 
soit  de  l’ouest  a  Test,  sur  un  espace  de  3T0  a  445  kilometres, 
les  marchandises  n’avaient  pas  moins  de  seize  lignes  de  dou¬ 
anes  a  traverser,  non  compris  les  lignes  interieures  appar- 
tenant  a  l’Etat,  aux  communes  et  meme  aux  particuliers ! 
De  la,  des  frais  et  des  pertes  de  temps  enormes,  qui,  en  les 
grevant  outre  mesure,  arretaient  a  la  fois  la  production  et 
la  consommation. 

La  Prusse,  dont  les  provinces  orientales  etaient  separdes  du 
reste  de  la  monarchie  par  le  Hanovre,  le  Brunswick,  et  la 
Hesse-Cassel,  etqui  souffrait  le  plus,  peut-etre,  de  ce  morcelle- 
ment  de  son  territoire,  prit  l’initiative  des  negotiations  qui 
devaient  conduire  au  Zollverein  actuel.  Ses  ouvertures  furent 
d’abord  accueillies  par  le  Schwarzbourg-Sondershausen,  Tune 
de  ses  enclaves;  puis,  de  1819  a  1828,  l’association  naissante 
vit  successivement  venir  a  elle  les  principautes  ou  duchds  de 
Hesse-Darmstadt,  Schwarzbourg-Rudolstadt,  Saxe- Weimar, 
Anhalt-Bernbourg,  Anhalt-Dessau,  et  Anhalt-Coethen,  soit 
pour  la  totalite,  soit  pour  une  partie  de  leur  territoire.  Un 
certain  nombre  d’Etats  du  second  ordre,  ayant  a  leur  tete  la 
Baviere  et  le  Wiirtemberg,  tenterent  d’enrayer  ce  mouvement 
dans  lequel  ils  voyaient  un  agrandissement  indirect  de  l’influ- 
ence  politique  de  la  Prusse ;  mais,  convaincus  de  l’inutilite 
de  leurs  efforts  pour  constituer  une  ligne  douaniere  de  quelque 
importance,  ils  se  reunirent  au  Zollverein,  le  23  mars  1833. 
La  Saxe  suivit  leur  exemple,  le  30  mars  de  la  meme  ann6e, 
et  entraina  a  sa  suite  les  Etats  de  la  Thuringe,  la  branche 
Ernestine  de  Saxe,  Schwarzbourg  et  Reuss.  Apres  de  longues 
hesitations,  Bade  se  dedara  pour  le  Zollverein  le  12  mai  1835; 
Nassau,  le  10  d^cembre  1835 ;  Francfort-sur-le-Mein,  le  25 
janvier  1836 ;  la  principautd  de  Lippe-Detmold,  le  18  octobre; 
le  Brunswick,  le  19  octobre ;  la  Hesse-Electorale  et  le  comte 
de  Schaumbourg,  le  13  novembre ;  le  comte  de  Waldeck,  le  11 


198 


ECONOMIC  HISTORY. 


decembre  1841;  le  duclie  de  Luxembourg,  le  8  fevrier  1842; 
enfm,  le  ler  janvier  1854,  les  derniers  Etats  restes  fideles  a 
l’association  du  Steuerverein ,  c’est-a-dire  le  Hanovre  et  le 
duclie  d’Oldenbourg. 

D’apres  le  receiisement  de  decembre  1861,  la  population  de 
chaque  Etat  associe  s’elevait  aux  nombres  ci-apres :  — 


Prusse .  .  .  18,867,061 
Luxembourg  197,731 
Baviere  .  .  4,695,424 
Saxe  royale  .  2,225,244 
Thuringe  .  1,069,821 
Hanovre  .  .  1,908,631 


Wiirtemberg  .  1,720,708 
Bade  .  .  .  1,365,732 
Iiesse-Cassel  .  710,680 

Hesse-D  a  r  m- 
stadt  .  .  .  874,231 

Brunswick  .  257,624 


Oldenbourg  .  238,562 

Nassau  .  .  454,326 

Francfort  .  84,506 


Total.  .  .  34,670,277 


Ces  34.6  millions  d’habitants  occupent  une  superficie  de 
502,260  kilometres  carres. 

Le  Zollverein  n’est  pas  reste  commercialement  isoiy.  Des 
sa  formation,  il  s’est  efforce  d’agrandir  ses  debouches  par  des 
traites  avec  les  principaux  Etats  de  l’ancien  et  du  nouveau 
monde. 

Ces  traites  de  commerce  se  sont  succede  dans  Fordre  ci- 
apres :  avec  la  Hollande,  les  21  janvier  1839  et  31  decembre 
1851 ;  avec  la  Porte,  le  19/22  octobre  1840 ;  avec  l’Angle- 
terre,  les  2  mars  1841  et  11  novembre  185T ;  avec  la  Belgique, 
les  ler  septembre  1844,  2  janvier  1851,  et  18  fevrier  1852 ; 
avec  la  Sardaigne,  les  23  juin  1845,20  mai  1851,  et  28  octobre 
1859 ;  avec  l’Autriche,  le  19  fevrier  1853  (d’abord  avec  la 
Prusse  settlement,  puis  avec  le  Zollverein,  et  plus  tard,  avec 
les  ducli^s  de  Parme  et  de  Modene) ;  avec  le  Mexique,  le  30 
juillet  1855 ;  avec  Breme,  le  26  janvier  1856 ;  avec  la  Sicile, 
le  10  aout  1856 ;  avec  le  Danemark,  le  14  mars  1857  ;  avec 
l’Autriche  et  la  principality  de  Lichtenstein  (convention  mon^- 
taire),  le  24  janvier  1857 ;  avec  la  Perse,  le  25  juin  1857 ; 
avec  la  confederation  Argentine,  le  19  septembre  1857. 

L’influence  de  ces  traitds  stir  le  commerce  du  Zollverein  est 
clairement  indiqu^e  par  le  tableau  suivant,  qui  en  fait  con- 
naitre,  de  1834  a  1860,  la  valeur  moyenne  annuelle  absolue 
et  par  tete  d’habitant.  Pour  la  periode  1834-1846,  cette  va¬ 
leur  a  6t6  ccilcuUe  par  M.  O.  Hiibner  (Jahrbuch  pour  1860  et 


LE  Z  OLL  VERB  IN. 


199 


18611),  d’apres  des  prix  invariables;  pour  les  autres  annees, 
d’apres  les  prix  reels.  Les  sommes  sont  en  millions  de 
francs. 


P£riodes  et  annees. 

Importations. 

Exportations. 

Transit. 

Importations  et 

exportations 

reunies. 

Population 

moyenne  en 

millions. 

Valeur  par  tete. 

1834-1838  .  .  . 

477.0 

591.0 

219.0 

1,068.0 

24.6 

43.4 

1839-1843 .  .  . 

677.2 

662.6 

207.4 

1,339.9 

26.7 

50.2 

1844-1846  .  .  . 

813.4 

655.1 

260.6 

1,468.5 

29.0 

50.6 

1850-1852  .  .  . 

704.6 

670.5 

314.6 

1,375.1 

30.2 

45.5 

1853  . 

764.6 

942.7 

3956 

1,707.3 

32.5 

52.5 

1854  .  ‘  .  . 

1,009.1 

1,252.9 

457.5 

2,262.0 

32.6 

69.2 

1855.  .... 

1,184.2 

1,157.2 

626.2 

2,341.4 

32.7 

71.5 

1856  . 

1,312.9 

1,195.5 

550.9 

2,508.4 

33.0 

76.0 

1857  . 

1,327.5 

1,324.1 

541.5 

2,651.6 

33.2 

79.9 

1858  . 

1,205.6 

1,315.5 

419.2 

2,521.1 

33.5 

75.2 

D’apres  ce  tableau,  l’histoire  commercialc  du  Zollverein  a 
eu  trois  phases  tr&s-distinctes.  La  premiere  comprend  la 
pdriode  1834-1846 ;  c’est  peut-etre  la  plus  brillante.  La 
seconde  embrasse  les  annees  de  crise  1847  a  1852.  La  troi- 
sieme,  commencee  en  1853,  se  continue  en  ce  moment ;  1857 
en  est  le  point  culminant.  Yient  ensuite  une  reaction  assez 
sensible,  qui,  quoique  perdant  chaque  jour  de  son  intensite, 
n’a  pas  encore  fait  place  a  une  recrudescence  bien  caracter- 
isee.  —  Les  deux  colonnes,  importations  et  exportations ,  in- 
diquent  la  correlation  intime  qui  existe  toujours  et  partout 
entre  ces  deux  elements  du  commerce.  Inferieures  pendant 
assez  longtemps  aux  premieres,  les  secondes  ne  tardent  pas  a 
les  dgaler  et  meme  a  les  depasser  dans  certaines  amides.  C’est 
la  preuve  du  rapide  developpement  manufacturier  de  l’associa- 
tion.  Par  suite  de  l’extension  graduelle  de  son  rdseau  de 
voies  ferrdes,  de  l’amelioration  de  ses  voies  navigables  et  de 
la  rdduction  des  droits  de  transit  (aujourd’hui  supprimds), 
son  territoire  est,  en  outre,  empruntd  par  une  valeur  (calculde) 

1  On  sait  que  les  droits  de  douane  du  Zollverein  sont  etablis  au  poids.  Les 
publications  officielles  ne  font  done  pas  connaitre  la  valeur  du  commerce  de 
l’association. 


200 


ECONOMIC  HISTORY. 


sans  cesse  croissante  de  marchandises.  Ne  perdons  pas  de 
vue  toutefois  que  la  valeur,  surtout  la  valeur  actuelle ,  ne 
saurait  donner,  particulierement  dans  ces  dernieres  anndes 
ou  les  prix  ont  ete  l’objet  d’une  hausse  si  soudaine  et  si 
rapide,  la  mesure  exacte  du  mouvement  des  ^changes  et  du 
transit  du  Zollverein.  L’indication  des  quantity  serait  un 
document  plus  precis ;  mais  elle  exigerait  des  ddveloppements 
qui  ne  sauraient  trouver  place  ici. 


Designation  des  Articles. 

Importations. 

Exportations. 

1834. 

1844. 

1857. 

1834. 

1844. 

1857. 

88.9 

61.5 

78.4 

44.2 

46.5 

100.9 

Toiles  de  fil . 

84.1 

8.6 

16.9 

88.1 

57.0 

55.5 

Soieries  pures . 

Soieries  melangees . 

12.4 

14.6 

33.0 

27.4 

40.1 

85.1 

2.6 

8.2 

7.1 

7.9 

13.5 

18.0 

La  in  ages . 

4.9 

13.1 

22.5 

67.1 

96.0 

158.6 

Fourrures  et  pelleteries  .  .  . 

0.2 

0.1 

0.4 

0.4 

0.7 

1.9 

Habits  d’enfants . 

0.1 

0.3 

0.2 

0.7 

1.5 

1.9 

Objets  en  fer . 

2.2 

5.2 

10.9 

12.7 

13.9 

18.0 

Objets  en  cuivre  et  laiton  .  . 

0.7 

2.2 

3.0 

3.4 

3.0 

6.7 

Objets  en  plorab . 

0.04 

0.04 

0.03 

— 

— 

0.4 

Objets  en  zinc . 

— 

— 

0.1 

0  04 

0.1 

6.0 

Objets  en  etain . 

0.1 

0.1 

0.1 

01 

0.1 

0.4 

Quincaillerie . 

1.9 

3.7 

1.4 

18.4 

45.4 

52.5 

Objets  en  pierre,  marbre,  et 
autres  mineraux . 

0.4 

0.4 

0.03 

0.3 

1.1 

0.3 

Vaisselle  et  porcelaine  .... 

1.5 

1.5 

0.1 

3.7 

7.5 

20.2 

Verre  et  verrerie . 

2.6 

5.6 

7.1 

6.0 

3.7 

18.0 

Objets  en  bois . 

1.1 

2.6 

4.5 

7.9 

9.4 

22.9 

Objets  en  cuir . 

0.7 

1.5 

3.0 

3.7 

1.9 

7.1 

Brosserie  et  boissellerie  .  .  . 

0.1 

— 

0.04 

0.04 

0.1 

0.2 

Objets  en  paille,  en  ecorce,  etc. 

0.4 

0.7 

1.9 

0.04 

0.1 

0.3 

Papiers,  jeux  de  cartes,  papier 
de  tenture,  cartons  .... 

0.4 

0.4 

1.1 

4.5 

1.5 

7.5 

Produits  chimiques . 

1.9 

2.6 

6.0 

3.4 

4.9 

16.9 

Poudre  a  tirer . 

— 

— 

— 

0.1 

0.1 

0.4 

Savons  . 

0.1 

0.2 

0.1 

.0.1 

0.04 

0.2 

Bougies  et  chandelles  .... 

0.1 

0.1 

0.1 

0.1 

0.1 

1.9 

Farines  et  produits  farineux  .  . 
Sucre  raffine . 

0.1 

0.1 

4.9 

1.5 

1.1 

13.5 

0.3 

0.2 

0.1 

1.1 

1.9 

7.1 

Eau-de-vie . 

0.3 

30.4 

22 

1.1 

1.9 

35.2 

Tabac  .  .  .  . . 

1.5 

13.1 

9.0 

5.2 

5.6 

18.7 

Livres  . 

4.9 

7.1 

8.6 

4.5 

6.0 

16.9 

Instruments . 

0.4 

0.4 

1.1 

1.5 

6.7 

5.7 

Valeur  totale . 

164.9 

184.5 

223.9 

315.2 

365.4 

698.9 

Le  tableau  prdcddent  fait  connaitre  la  valeur  des  produits 
fabriquds  que  le  Zollverein  a  imports  et  exportds  en  1834, 


LE  Z  OLL  VERB  IN. 


201 


1844,  et  1857.  II  n’a  d’autre  but  que  d’indiquer  ceux  de  ces 
produits  qui  sont  le  plus  habituellement  consommes  ou  fab- 
riques  dans  les  Etats  de  l’Union,les  quantites  ayant  du  neces- 
sairement  s’elever  avec  le  chiffre  de  la  population.  Cependant 
il  fournit  ce  renseigncment  important  et  independant  du 
mouvement  de  la  population,  que,  tandis  que  les  importations 
ne  se  sont  accrues,  de  1834  a  1857,  que  de  36  p.  100,  les 
exportations  ont  plus  que  double.  C’est,  comme  nous  le 
aisons  plus  haut,  le  signe  certain  des  progres  remarquables 
de  Findustrie  manufacturiere  dans  l’association. 

La  signature  recente  d’un  traite  de  commerce  et  de  naviga¬ 
tion  entre  la  France  et  la  Prusse,  traite  en  ce  moment  soumis 
a  l’examen  des  autres  Etats  de  l’association,  donne  un  interet 
particulier  au  tableau  ci-apr£s,  relatif  a  nos  relations  com- 
merciales  avec  le  Zollverein.  II  a  ete  dresse  d’apres  les  docu¬ 
ments  fran^ais,  et  indique  les  valeurs  actuelles  (en  millions 
de  francs).  II  se  rapporte  au  commerce  special. 


Anndes. 

Importa¬ 
tions  en 
France. 

Exporta¬ 
tions  de 
France. 

Annees 

Importa¬ 
tions  en 
France. 

Exporta¬ 
tions  de 
France. 

1847  . 

52.7 

46.2 

1853  .... 

69.9 

49.0 

1848  . 

23.0 

29.6 

1854  .... 

75.7 

54.6 

1849  . 

32.3 

38.0 

1855  .... 

108.1 

65.5 

1850  . 

36.2 

44.7 

1856  .... 

110.3 

89.7 

1851 . 

38.1 

44.1 

1857  .... 

120.7 

117.7 

1852  . 

48.3 

42.3 

1858  .... 

r 

106  8 

147.7 

Les  importations  du  Zollverein  en  France  portent  princi- 
palement  sur  des  matures  premieres  de  Findustrie  (laines, 
bestiaux,  houille,  coke,  bois,  peaux  brutes,  poils).  Les  soie- 
ries  et  les  lainages  y  figurent  cependant  pour  un  chiffre  assez 
elevd. 

Les  exportations  de  la  France  pour  le  Zollverein  ont,  au 
contraire,  pour  objets  principaux  des  produits  fabriquds, 
comme  les  soieries,  les  lainages,  les  vetements  et  lingeries, 
les  cotonnades  imprimees,  les  peaux  ouvrees,  les  fils  de  laine, 
les  outils  et  instruments,  etc.  La  France  exp^dic  en  outre 
dans  le  Zollverein,  quand  la  r^colte  est  bonne,  des  quantities 
assez  considerables  de  vins  ordinaircs. 


202 


ECONOMIC  HISTORY. 


S’il  fallait  juger,  d’apres  le  mouvement  de  la  navigation 
dans  les  ports  prussiens,  de  l’importance  relative  du  com¬ 
merce  du  Zollverein  avec  les  divers  Etats  europeens,  c’est 
avec  FAngleterre  qu’il  entretiendrait  le  mouvement  d’affaires 
le  plus  considerable.  Yiendraient  ensuite,  par  ordre  decrois¬ 
sant  de  trade,  les  trois  royaumes  scandinaves,  la  Hollande, 
les  portes  anseatiques,  la  France,  la  Russie,  etc.  Mais  il  ne 
faut  pas  perdre  de  vue  qu’en  ce  qui  concerne  la  France,  la 
plus  grande  partie  de  son  commerce  avec  le  Zollverein  se 
fait  par  la  voie  de  terre. 

Les  recettes  des  douanes  du  Zollverein  out  oscille  ainsi 
qu’il  suit  de  1834  a  1859  (nombres  en  millions  de  francs). 


Annees. 

Importa¬ 

tion. 

Exporta¬ 

tion. 

Transit. 

Annees. 

Importa¬ 

tion. 

Exporta¬ 

tion. 

Transit. 

1834 

•  • 

52.1 

1.5 

1.9 

1847 

•  • 

100.9 

3.0 

1.5 

1835 

•  • 

59.6 

1.9 

1.9 

1848 

•  • 

85.5 

1.5 

1.1 

1836 

•  • 

65.6 

1.9 

1.9 

1849 

•  • 

88.9 

1.5 

1.9 

1837 

•  • 

63.7 

1.5 

2.2 

1850 

•  • 

86.2 

1.1 

1.9 

1838 

#  * 

72.4 

1.9 

1.9 

1851 

•  • 

87.0 

1.1 

1.5 

1839 

•  • 

73.9 

1.9 

2.6 

1852 

,  # 

91.1 

1.1 

1.5 

1840 

•  • 

76.9 

1.9 

26 

1853 

•  • 

82.5 

1.1 

1.9 

1841 

•  • 

80.2 

1.5 

2.2 

1854 

•  • 

86.2 

0.7 

1.5 

1842 

•  • 

85.5 

1.5 

2.2 

1855 

•  • 

97.5 

0.7 

2.2 

1843 

•  • 

92.6 

1.5 

2.2 

1856 

•  • 

98.6 

0.7 

1.5 

1844 

•  • 

96.0 

1.9 

2.6 

1857 

•  • 

99.0 

0.7 

1.5 

1845 

•  • 

101.6 

1.5 

1.5 

1858 

•  • 

106.1 

0.7 

1.5 

1846 

• 

99.5 

1.9 

1.1 

1859 

• 

88.1 

0.7 

1.5 

Les  faibles  oscillations  du  produit  des  douanes  depuis  1844 
constituent  le  trait  saillant  de  ce  tableau.  Toutefois,  cet  etat 
a  peu  pres  stationnaire  des  recettes  ne  saurait  etre  intcrprdtd, 
en  presence  des  documents  qui  precedent,  commc  le  signe 
d’un  mouvement  d’affaires  peu  progressif.  II  ne  faut  pas 
perdre  de  vue,  d’aillcurs,  que  les  plus  grand  nombre  des  ma- 
tieres  premieres  ont  dte,  en  1851  et  depuis,  ou  completement 
affrancliies  ou  considerablement  degrees.  Les  droits  de 
transit  ont  6galement  6te  l’objet  d’importantes  reductions 
jusqu’au  moment  de  leur  suppression  en  1861.  .  .  . 

En  1858  et  1859,  les  recettes  a  l’importation  (seulement), 
ramendes  a  100,000,  se  sont  rdparties  ainsi  qu’il  suit  entre  les 
Etats  qui  precedent  (Francfort-sur-le-Mein  non  compris)  :  — 


203 


LE  ZOLLVEREIN. 

i 


1S58. 

1859. 

Prusse  . 

50,920 

54,021 

Baviere . 

13,188 

*  13,022 

Hanovre . 

10,062 

10,321 

Saxe . 

5,194 

5,980 

Wiirtemberg . 

4,843 

4,769 

Bade . 

3,808 

4,759 

Thuringe . .  . 

2,975 

2,941 

Hesse  (Grand-duche) . 

2,400 

2,431 

Hesse  (Electorate) . 

2,058 

1,972 

Oldenbourg  . 

1,268 

1,310 

Nassau . 

1,242 

1,228 

Brunswick . 

713 

704 

Luxembourg . 

549 

542 

Totaux . 

100,000 

100,000 

Yoici  quelle  a  ete  la  repartition  de  la  recette  nette  entre 
les  divers  Etats,  de  1857  a  1859  (valeurs  en  millions  de 
francs)  :  — 


1857. 

1858. 

1859. 

Pour 

100. 

Prusse . 

45,330,221 

49,468,492 

39,776,546 

50.77 

Baviere . 

11,635,260 

12,689,373 

10,055,831 

12.84 

Hanovre . 

9,156,903 

9,704,025 

7,969,578 

10.18 

Saxe . 

5,282,801 

5,762,655 

4,677,101 

5.97 

Wiirtemberg.  .  .  . 

4,273,155 

4,667,726 

3,679,368 

4.70 

Bade . 

3,359,430 

.  3,070,278 

2,902,875 

3.71 

Ltats  de  Thuringe  .  . 

2,657,085 

2,898,435 

2,300,415 

2.94 

Hesse  (Grand-duche)  . 

2,147,583 

2,370,881 

1,877,872 

2.40 

Hesse  (Electorale)  .  . 

1,815,843 

1,983,858 

1,522,751 

1.94 

Oldenbourg  .... 

1,154,006 

1,223.058 

1,011,798 

1.29 

Nassau . 

1,096,125 

1,197,142 

948,247 

1.21 

Francf  o  r  t-s  ur-le-  Mein 

717,188 

781,402 

667,983 

0.85 

Brunswick  .... 

633,926 

691,882 

548,051 

0.70 

Luxembourg  .... 

484,833 

529,695 

418,218 

0.50 

Totaux  .... 

89,744,369 

97,938,902 

78,356,634 

100.00 

La  colonne  des  rapports  cent^simaux  des  deux  tableaux 
qui  precedent,^  appelle  tout  particulierement  l’attention  en 
indiquant  les  Etats  qui  gagnent  ou  perdent  a  l’association. 
Ainsi,  par  exemple,  la  Prusse,  qui  encaisse  58.82  p.  100  des 
recettes  totales,  ne  figure  que  pour  50.77  dans  la  repartition, 


204 


ECONOMIC  HISTORY. 


tandis  que,  pour  la  Baviere,  ces  rapports  sont  respectivement 
de  5.15  a  la  recette  et  de  12.84  a  la  repartition.  En  resume, 
les  EtatS  gagnants  sont  les  suivants  :  Baviere,  Hanovre,  Wiir- 
temberg,  les  deux  Hesses,  la  Thuringe,  Oldenbourg,  et  Nassau. 
La  Prusse,  le  Luxembourg,  la  Saxe,  Bade,  Brunswick,  et 
Francfort-sur-le-Mein  composent  la  serie  des  perdants.  Les 
parts  du  Zollverein  sont  ceux  de  la  Prusse,  du  duclie  d’Olden- 
bourg  et  du  Hanovre.  Les  documents  qui  suivent  indiquent 
le  mouvement  de  la  navigation  de  ces  ports  de  1856  a  1859 
(grand  et  petit  cabotage  non  compris). 


PORTS  PRUSSIENS. 


Annkes. 

Batiments. 

Tonneaux.* 1 

Batiments 

SUR  LEST.2 

Tonneaux. 

Entres. 

Sortis. 

Entres. 

Sortis. 

Entres. 

Sortis. 

Entres. 

Sortis. 

1859  .  .  . 

1.S68  .  .  . 

1857  .  .  . 

1856  .  .  . 

9,116 

8,922 

8  533 
7,582 

9,197 

9,032 

8,441 

7,684 

1,471,522 

1,401,560 

1,584.622 

1,337,746 

1,414,602 

1,469,582 

1,564,384 

1,374,416 

2,668 

2,599 

3,052 

1,994 

1,743 

1,939 

1,229 

2,111 

452,846 

433,788 

561,130 

381,850 

319.458 

401,614 

254,432 

380,310 

Dans  le  duch6  d’Oldenbourg,  la  navigation  a  6t6  en  1859 : 
a  l’entree,  de  933  navires  charges,  jaugeant  78,484  lasts  et 
de  11  sur  lest,  jaugeant  879  lasts;  a  la  sortie,  de  311  navires 
charges,  jaugeant  38,295  lasts  et  de  502  sur  lest  avec  37,821 
lasts. 

PORTS  HANOVRIENS. 


Navires  Charges. 

Navires 

SUR  LEST. 

Nombre. 

Lasts. 

Nombre. 

Lasts. 

1859  .  .  ■ 

Entree  .  . 

1,141 

36,850 

782 

21,004 

Sortie 

1,092 

29,270 

899 

32,964 

1858  . 

Entree  .  . 

Sortie  .  . 

3,016 

1,194 

112,931 

36,459 

592 

2,470 

21,858 

100,281 

Les  avantages  purement  matd riels  du  Zollverein  pour  les 
fitats  int6ress6es  peuvent  se  resume  r  ainsi  qu’il  suit :  1°  re- 

1  Le  tonneau  de  mer  prussien  =  968k.80. 

2  Compris  dans  les  totaux  precedents. 


LE  ZOLL  V ERE  IN. 


205 


duction  des  frais  de  perception  et  d’administration,  par  suite 
de  la  suppression  des  rayons  de  douanes  entre  les  Etats  asso- 
cies ;  2°  rapide  developpement  industriel,  par  suite  de  l’ap- 
plication  d’un  tarif  modere ;  3°  elevation  du  chiffre  primitif 
des  recettes  de  douane,  par  suite  de  l’accroissement  de  con- 
sommation  resultant  de  Implication  de  ce  tarif ;  4°  conclu¬ 
sion  de  traites  de  commerce  avantageux  avec  l’etranger,  plus 
dispose  a  faire  des  concessions  a  un  Etat  qui  lui  off  re  un  de- 
bouche  considerable  qu’a  des  pays  sans  importance ;  5°  usage 
gratuit  ou  a  des  conditions  tres  moderees  des  grandes  voies 
de  communication,  terrestres,  fluviales,  ou  maritimes,  qui  n’ex- 
istaient  auparavant  qu’au  profit  d’un  ou  de  quelques-uns  d’entre 
eux ;  6°  rapide  essor  de  certaines  industries  indigenes,  aux- 
quelles  la  libre  ouverture  d’un  marche  interieur  de  33  mil¬ 
lions  d’habitants,1  ainsi  que  l’usage  en  franchise  de  matures 
premieres  fournies  par  l’un  ou  l’autre  des  Etats  associes  et 
autrefois  f rappees  de  droits  de  douane,  permettent  de  pro- 
duire  plus  economiquement ;  7°  creation  d’une  forte  marine 
marchande. 

L’institution  du  Zollverein  a  eu  des  avantages  correspond- 
ants  pour  le  commerce  etranger.  Au  lieu  d’avoir  a  traverser 
40  lignes  douanieres,  defendues  par  des  droits  plus  ou  moins 
compliques,  plus  ou  moins  eleves,  et  appliques  par  des  ad¬ 
ministrations  plus  ou  moins  tracassieres,  il  s’est  trouve  en 
face  d’un  pays  unique,  recevant  ses  produits  a  des  conditions 
relativement  moderees.  Au  lieu  d’avoir  a  traiter  avec  des 
consommateurs  peu  aises,  restreignant  leurs  depenses  au  plus 
strict  neccssaire,  il  a  profits  du  developpement  de  la  richesse 
publique  dans  le  Zollverein  devenu,  apres  quelques  annees, 
un  grand  pays,  non-seulement  par  le  territoire  et  la  popula¬ 
tion,  mais  encore  par  le  bien-etre  croissant  de  sa  population. 

Le  Zollverein  n’est  cependant  pas,  dans  son  organisation 
et  ses  resultats  actuels,  la  formule  la  plus  complete,  la  plus 
heureuse  du  principe  de  l’association  commerciale.  Le  mode 
compliqud  de  ses  deliberations  ;2  la  difficulte,  pour  ses  membres, 

1  D’aprcs  le  denombrement  de  1861  dont  les  resultats  officiels  nous  arrivent 
en  ce  moment,  de  34,705,604  habitants. 

2  On  sait  que  toutes  les  deliberations  du  Zollverein,  pour  etre  valables, 


206 


ECONOMIC  HISTORY. 


d’arriver,  sur  les  questions  les  plus  graves,  a  une  solution  favo¬ 
rable  aux  interets  souvent  tres  opposes  qu’ils  represented ; 
les  influences  politiques  qui  s’agitent  dans  son  sein  et  l’em- 
pechent  de  discerner  toujours  clairement  la  voie  a  suivre 
pour  tirer  de  l’union  les  resultats  economiques  les  plus  con¬ 
siderables,  telles  sont  les  justes  critiques  dont  il  a  souvent 
ete  l’objet.  On  peut  encore  lui  reprocher  de  maintenir, 
malgre  l’exemple  de  l’Angleterre  et  de  la  France,  des  droits 
qui,  pour  certains  produits  fabriques,  depassent  tres-sensible- 
ment,  par  le  fait  de  la  diminution  considerable,  depuis  la 
formation  du  Zollverein,  du  prix  des  produits  greves,  cette 
moyenne  de  10  p.  100  de  la  valeur,  destinee,  d’apres  le  pro¬ 
gramme  de  Tassociation  a  son  debut,  a  devenir  la  base  de  son 
tarif.  Cette  protection  exageree  est  une  double  faute,  d’abord 
parce  que  les  consommateurs  de  l’association,  moins  ais^s  que 
ceux  des  deux  pays  que  nous  venons  de  citer,  sont  moins  en 
etat  de  payer  des  prix  Aleves ;  puis,  parce  que  le  Zollverein, 
par  les  perfectionnements  introduits  dans  ses  procedes  de 
fabrication  et  le  bas  prix  de  la  main-d’ceuvre,  est  aujourd’hui 
tout  a  fait  en  mesure  de  lutter  efficacement  contre  la  con¬ 
currence  etrangere.  1862. 

doivent  etre  prises  a  l’unanimite.  Ainsi,  dans  ces  deliberations,  la  Prusse 
ne  pese  pas  d’un  plus  grand  poids  que  Francfort-sur-le-Mein  avec  ses  80,000 
habitants!  .  .  . 


THE  CORN  LAWS. 


207 


IX. 


THE  CORN  LAWS,  1801-1849. 


From  Levi’s  History  of  British  Commerce,1  2d  Ed. 


PART  III.  — CHAP.  7. 


HE  corn  laws  had  long  been  a  bone  of  contention  in 


A  England.  Maintained  for  the  interest  of  a  class  who 
clung  to  them  as  their  anchor  of  safety,  they  had  always  been 
attacked  as  an  obstacle  to  the  well-being  of  the  middle  and 
lower  classes.  In  the  opinion  of  their  advocates,  protection 
was  necessary  in  order  to  keep  certain  poor  lands  in  cultiva¬ 
tion,  and  to  encourage  the  cultivation  of  as  much  land  as 
possible  in  order  to  provide  for  the  wants  of  the  country. 
Let  the  cultivation  of  such  lands  cease,  they  said,  and  we 
shall  be  dependent  on  foreigners  for  a  large  portion  of  the 
people’s  food.  Such  dependence,  moreover,  may  be  fraught 
with  immense  danger,  inasmuch  as,  in  the  event  of  war,  the 
supplies  may  be  stopped  or  our  ports  may  be  blockaded,  the 
result  of  which  may  be  famine,  disease,  or  civil  war.  Ac¬ 
cording  to  the  defenders  of  protection  it  was  the  advantage 
gained  by  the  corn  laws  that  enabled  landed  proprietors  and 
their  tenants  to  encourage  manufactures  and  trade.  Abolish 
the  corn  laws  and  half  the  country  shopkeepers  will  be 
ruined,  mills  and  factories  will  be  stopped,  large  numbers  of 
the  working-classes  will  be  thrown  out  of  work,  disturbances 
will  ensue,  capital  will  be  withdrawn,  and  no  one  dare  ven¬ 
ture  to  say  what  may  be  the  fatal  consequences. 

In  1801  the  price  of  wheat  reached  the  high  limit  of  155s. 
a  quarter,  and  we  may  well  imagine  what  sufferings  that 
price  entailed  among  the  people,  at  a  time  especially  when 


1  London :  John  Murray,  1880. 


208 


ECONOMIC  HISTORY. 


trade  and  manufacture  were  so  much  paralyzed  by  the  Con¬ 
tinental  war.  Happily,  for  two  or  three  years  afterwards,  a 
succession  of  good  harvests  changed  the  condition  of  things, 
and  in  March,  1804,  the  price  of  wheat  fell  to  49s.  6d.  per 
imperial  quarter.  But  what  was  anxiously  desired  by  the 
people  was  regarded  a  great  disaster  by  the  agricultural  in¬ 
terest.  They  complained  that  with  the  high  cost  of  produc¬ 
tion,  in  consequence  of  high  wages,  high  rate  of  interest, 
and  the  heavy  cost  of  implements  of  husbandry,  they  could 
not  afford  to  sell  at  such  prices.  Meetings  were  held 
throughout  the  country  to  consider  the  case  of  the  farmers. 
Mr.  Western  brought  the  state  of  agriculture  before  the 
House  of  Commons,  and  a  committee  was  appointed  on  the 
subject.  The  farmers  contended  that  at  a  time  when  all 
foreign  supplies  were  shut  out  from  our  markets,  and  when 
we  were  more  than  ever  depending  on  home  production,  it 
was  the  bounden  duty  of  the  legislature  to  pass  laws  which 
would  encourage  the  production  of  grain  at  home,  so  that 
the  nation  might  *be  as  much  as  possible  independent  as  re¬ 
gards  the  first  necessaries  of  life.  Unfortunately  all  the 
measures  hitherto  taken  for  the  protection  of  the  farmers 
resulted  only  in  the  aggravation  of  the  sufferings  of  the 
people.  It  was  easy  by  means  of  prohibitions  and  bounties 
to  raise  the  price  of  corn  and  to  give  an  artificial  stimulus  to 
agricultural  prosperity,  but  the  people  were  not  able  to  buy 
bread  at  famine  prices,  especially  at  a  time  when  taxes  were 
so  heavy.  The  report  of  the  committee  of  the  House  of 
Commons,  presented  the  same  session  in  1804,  was  to  the 
effect  that  the  price  of  corn  from  1791  to  the  harvest  of  1808 
had  been  very  irregular,  but  that  upon  an  average  it  had  in¬ 
creased  in  a  great  degree  in  consequence  of  the  years  of 
scarcity,  and  had  in  general  yielded  a  fair  profit  to  the 
grower.  It  appeared  to  the  committee,  moreover,  that  high 
prices  had  the  effect  of  stimulating  agricultural  industry  in 
bringing  into  cultivation  large  tracts  of  waste  lands,  and 
that  this  fact  combined  with  the  abundance  of  the  two  last 
productive  seasons,  and  other  causes,  occasioned  such  a  de¬ 
pression  in  the  value  of  grain  as  would  tend  to  the  discour- 


THE  CORN  LAWS. 


209 


agement  of  agriculture,  unless  maintained  by  the  support  of 
Parliament.  Nor  was  there  much  difficulty  in  persuading 
the  legislature  to  give  heed  to  such  recommendations.  Very 
soon  after  the  presentation  of  the  report  a  corn  law  was 
passed,1  which  imposed  a  duty  of  24s.  3 d.  per  quarter  on 
wheat  so  long  as  the  price  of  the  home  market  should  be 
under  63s.  ;  of  2s.  6<i.  so  long  as  the  price  should  be  at  or 
above  that  rate,  and  under  66s.  ;  and  of  6d.  a  quarter  when 
the  price  should  be  above  that  rate.  It  does  not  appear, 
however,  that  the  fear  entertained  by  the  farmers  and  the 
agricultural  interest  had  been  very  substantial,  for  in  the 
same  year  the  harvest  was  deficient  in  quantity  and  inferior 
in  quality,  and  all  apprehensions  that  bread  might  become 
too  cheap  were  entirely  out  of  the  question.  A  proposal,  in¬ 
deed,  was  made  to  encourage  the  growth  of  corn  in  Great 
Britain,  and  yet  to  diminish  the  price  thereof  for  the  benefit 
of  the  people  by  exempting  farmers  from  all  direct  taxes. 
But  such  a  plan  would  have  only  transferred  the  burden  from 
one  class  to  another.  The  time  had  not  yet  arrived  for 
acting  on  the  “  laissez-faire  ”  principle.  Artificial  aid 
was  sought  for  on  all  sides,  and  that  always  ended  in 
disappointment. 

At  the  conclusion  of  the  French  war,  in  1815,  precisely  the 
same  state  of  matters  arose  as  in  1804.  By  the  opening  of 
the  ports,  wheat  which  hitherto  averaged  £5  10s.  a  quarter 
suddenly  fell  to  £3  5s.,  and  immediately  the  farmers  raised 
a  cry  of  distress.  Again  a  committee  of  the  House  of  Com¬ 
mons  was  appointed  to  inquire  into  the  state  of  the  law 
affecting  the  corn  trade,  and  once  more  the  legislature  was 
engaged  in  framing  a  corn  law,2  which  resulted  in  an  act 
prohibiting  the  importation  of  wheat  when  the  price  was 
under  80s.,  and  rendering  it  free  when  above  80s.  Yet 
serious  misgivings  existed  as  to  the  ultimate  effect  of  the 
restrictive  legislation  respecting  corn  in  the  minds  of  many, 
and  in  the  very  House  of  Lords,  which  traditionally  stood 
in  bold  defence  of  a  protective  policy,  protests  were  lodged, 

1  44  Geo.  III.  c.  109. 

2  55  Geo.  III.  c.  26. 

14 


210 


ECONOMIC  HISTORY. 


wliich  indicated  the  existence  of  a  more  enlightened  opinion 
on  the  real  bearings  of  the  whole  question.  Lord  Grenville 
and  his  "compeers  protested  against  this  new  corn  law,  be¬ 
cause  they  were  adverse  in  principle  to  all  new  restraints  in 
commerce,  deeming  it  most  advantageous  to  public  prosper¬ 
ity  to  leave  uncontrolled  the  free  current  of  national  indus¬ 
try.  In  their  opinion  “the  great  practical  rule  of  leaving 
all  commerce  •  unfettered  applied  more  peculiarly,  and  on 
still  stronger  grounds  of  justice  as  well  as  of  policy,  to  the 
corn  trade  than  to  any  other.  Irresistible,  indeed,  must  be 
that  necessity  which  could,  in  their  judgment,  authorize  the 
legislature  to  tamper  with  the  sustenance  of  the  people,  and 
to  impede  the  free  purchase  and  sale  of  that  article  on 
which  depends  the  existence  of  so  large  a  portion  of  the 
community.  They  thought  that  expectations  of  ultimate 
benefit  from  any  corn  law  were  founded  on  a  delusive  theory. 
They  could  not  persuade  themselves  that  such  a  law  would 
ever  contribute  to  produce  plenty,  cheapness,  or  steadiness 
of  price.  So  long  as  it  operated  at  all,  its  effects  must  be 
the  opposite  of  these.  Monopoly  is  the  parent  of  scarcity, 
dearness,  and  uncertainty.  To  cut  off  any  of  the  sources  of 
supply  can  only  tend  to  lessen  its  abundance.  To  close 
against  ourselves  the  cheapest  market  for  any  commodity 
must  enhance  the  price  at  which  we  purchase  it.  4nd  to 
confine  the  consumer  of  corn  to  the  produce  of  his  own  coun¬ 
try  is  to  refuse  ourselves  the  benefit  of  that  provision  which 
Providence  itself  has  made  for  equalizing  to  man  the  varia¬ 
tions  of  climate  and  of  seasons.  But  whatever  might  be  the 
future  consequences  of  that  law  at  some  distant  and  uncer¬ 
tain  period,  they  were  convinced  that  these  hopes  must  be  pur¬ 
chased  at  the  expense  of  a  great  and  present  evil.  To  compel 
the  consumer  to  purchase  corn  dearer  at  home  than  it  might 
be  imported  from  abroad  was  the  immediate  practical  effect 
of  the  law  just  passed.  In  this  way  alone  could  it  operate. 
Its  present  protection,  its  promised  extension  of  agriculture 
must  result  (if  at  all)  from  the  profits  which  it  created  by 
keeping  up  the  price  of  corn  to  an  artifical  level.  These  fut¬ 
ure  benefits  were  the  consequences  expected,  though  they  con- 


THE  CORN  LAWS . 


211 


fidently  believed  erroneously  expected,  from  giving  a  bounty 
to  the  grower  of  corn  by  a  tax  levied  on  its  consumers.  ” 
Such  were  the  reasons  urged  against  the  corn  law  of  1815, 
and  certainly  they  do  honor  to  those  who  recorded  them  in 
the  journal  of  the  House.  But  many  a  year  was  to  pass  ere 
the  protests  of  the  few  did  become  the  deliberate  conviction 
of  the  entire  community. 

For  twelve  years  nothing  further  occurred  on  the  subject 
of  the  corn  laws  except  the  emission  of  repeated  cries  of 
distress  by  the  agricultural  classes,  especially  in  the  House 
of  Lords.  The  country  was  indeed  learning  by  bitter  ex¬ 
perience  how  direct  is  the  relation  between  dear  bread  and 
bad  trade,  and  the  time  arrived  when  the  working  of  the 
corn  law  was  to  be  laid  before  the  legislature.  “  The  corn 
laws,”  said  Mr.  Whitmore,  “have  inflicted  the  greatest  in¬ 
jury  upon  the  general  trade  of  the  world  that  ever  perhaps 
was  produced  by  injudicious  legislation.  They  have  de¬ 
ranged  its  course,  stagnated  its  current,  and  caused  it  to 
flow  in  new  and  far  less  beneficial  channels  than  it  formerly 
occupied.”  To  the  corn  laws  he  attributed  the  great  and 
ruinous  fluctuation  of  prices,  which  is  the  inevitable  result 
of  a  system  of  restriction.  “  The  more  the  basis  from  whence 
your  supplies  are  drawn  is  widened,  the  greater  the  steadi¬ 
ness  of  prices ;  the  more  it  is  narrowed  the  more  constant  and 
the  more  fatal  is  their  effect  on  the  fluctuations  to  which  you 
are  subject.  In  the  early  times,  when  there  was  a  difficulty 
in  the  conveyance  of  bulky  commodities  from  one  part  of  the 
country  to  another,  arising  from  want  of  roads,  when  there 
existed  a  prejudice  as  well  as  a  legal  penalty  against  what  was 
called  forestalling  and  regrating,  the  fluctuations  in  prices 
were  immense.  And  the  same  holds  good  as  regards  other 
times  and  other  countries.  ”  Lord  Lauderdale  himself,  while 
entertaining  considerable  fear  of  foreign  competition,  clearly 
showed  what  are  the  solid  and  what  are  the  fictitious  ways 
to  agricultural  prosperity.  “I  will  take  upon  myself,”  he 
said,  “  to  assert  that  if  there  is  any  one  proposition  in  politi¬ 
cal  economy  which  may  be  affirmed,  it  is  this,  that  the 
interests  of  landlords  properly  understood  are  absolutely 


212 


ECONOMIC  HISTORY. 


identified  with  the  general  interests  of  the  country.  Land¬ 
lords  have  no  interest  in  high  prices ;  high  prices  raise  rents 
nominally  and  in  appearance ;  and  now  and  then  some  tem¬ 
porary  advantage  may  be  obtained  from  them,  for  which 
landlords  will  always  pay  afterwards  with  more  than  com¬ 
pound  interest ;  but  rents  can  only  be  raised  largely,  perma¬ 
nently,  and  beneficially  to  landlords  by  one  of  two  causes, 
both  of  which  ‘are  equally  conducive  to  the  prosperity  of  all 
other  classes;  first,  by  improvements  in  agriculture,  which 
leave  a  larger  surplus  produce  after  the  expenses  of  cultiva¬ 
tion  are  defrayed ;  and  secondly,  by  improved  and  extended 
markets.  Now  all  improvements  of  agriculture  which  in¬ 
crease  the  surplus  produce  of  the  country  are  obviously  a 
direct  addition  to  the  public  wealth.  And  how  are  markets 
improved  and  extended  ?  By  new  communication,  —  roads, 
railways,  canals,  —  but  principally  by  the  continual  rise 
and  increase  of  large  towns  within  our  own  empire,  rendered 
rich  and  prosperous  by  thriving  manufactures,  and  by  all  the 
improvements  in  skill  and  machinery  connected  with  such 
establishments.  The  best  job  for  the  landlord  is  the  pros¬ 
perity  of  trade  in  all  its  branches,  as  the  best  job  for  trade 
is  a  prosperous  state  of  agriculture.  There  is  nothing  to 
make  the  inhabitant  of  the  town  and  the  cultivator  of  the 
soil  jealous  of  each  other;  quite  the  contrary,  for  the  more 
each  produces,  the  more  he  will  have  to  exchange  for  the 
other ;  and  this  is  the  foundation  of  the  great  internal  trade 
which  is  worth  one  hundred  times  more  than  all  the  foreign 
commerce  of  the  country  put  together.” 

Yet  notwithstanding  the  enunciation  of  these  truths  the 
farmers  clung  tenaciously  to  protection;  and  it  was  not 
without  a  great  struggle  that  they  allowed  the  corn  laws  to 
be  relaxed  to  a  small  extent.  In  the  session  of  1827  resolu¬ 
tions  were  passed  in  the  House  of  Commons  to  the  effect 
that  corn  should  be  allowed  to  be  imported  free  of  duty,  in 
order  to  be  warehoused,  and  that  it  should  be  admissible  for 
home  consumption  at  a  shilling  per  quarter  duty  when  the 
price  of  wheat  should  be  70s.,  and  at  two  shillings  more  for 
every  shilling  that  the  price  fell  below  70s.  per  quarter. 


THE  CORN  LA  WS. 


218 


These  resolutions,  however,  made  no  progress  in  conse¬ 
quence  of  the  change  of  government.  The  following  session 
the  House  of  Commons  passed  other  resolutions  to  the  effect 
of  imposing  a  sliding  scale  from  23s.  per  quarter  when  the 
price  of  wheat  should  be  64s.,  and  16s.  8c?.  when  the  price 
should  be  69s.,  to  one  shilling  per  quarter  when  the  price 
should  be  at  and  above  73s.  per  quarter.  And  upon  these 
bases  a  new  corn  law  was  passed,1  which,  like  its  predeces¬ 
sors,  did  not  long  remain  in  force. 

It  was  ten  years  after  the  passing  of  this  first  sliding 
scale,  or  on  March  15,  1838,  that  Mr.  Villiers,  seconded  by 
Sir  William  Molesworth,  first  commenced  his  attack  on  the 
policy  of  the  com  laws  in  the  House  of  Commons,  though 
with  little  effect.  In  those  days  political  economists  were 
simply  allowed  to  speak  and  complain.  Their  opinions 
were  received  as  mere  speculative  theories,  their  recom¬ 
mendations  were  deemed  as  far  beyond  the  reach  of  practical 
statesmanship.  There  was  only  one  minister  present  when 
Mr.  Villiers’  motion  was  made,  and  as  might  have  been  ex¬ 
pected,  it  was  lost  by  an  overwhelming  majority.  But  about 
that  time  a  lecture  was  advertised  to  be  delivered  at  Bolton, 
the  birthplace  of  Arkwright  and  Crompton,  on  the  corn 
laws,  by  a  person  quite  a  stranger  to  the  town.  It  was  a 
new  subject  for  a  lecture,  and  as  the  public  mind  was  di¬ 
rected  to  the  question,  the  lecture  drew  a  fair  number  of 
hearers.  The  lecturer,  however,  found  only  when  it  was  too 
late  that  it  was  not  easy  to  deal  with  economic  questions 
before  a  mixed  audience,  and  he  completely  broke  down. 
The  audience,  not  prepared  for  the  disappointment,  became 
impatient  and  vociferous,  and  a  riot  was  impending,  when  a 
youth,  a  medical  student,  rushed  to  the  platform,  and  on  the 
spur  of  the  moment  addressed  the  people  on  the  subject  in  a 
vigorous  and  manly  manner.  The  people  were  delighted  at 
this  turn,  and  Mr.  Paulton  won  for  himself  enthusiastic 
admiration.  On  the  news  of  such  an  event  travelling  to  the 
neighboring  towns,  the  volunteer  lecturer  was  overwhelmed 


i  9  Geo.  IV.  c.  38. 


214 


ECONOMIC  HISTORY. 


with  invitations  to  redeliver  his  address,  and  everywhere  he 
captivated  the  audience  with  his  eloquent  attacks  on  monop¬ 
oly  and”  monopolists. 

As  the  interest  in  the  question  of  the  corn  laws  grew  and 
extended,  it  became  evident  that  a  special  and  more  popular 
agency  was  wanted  for  the  purpose,  and  thus  in  October  of 
1888  eight 1  men  first  united  themselves  with  a  view  to  estab¬ 
lish  an  Anti-Corn  Law  Association.  The  list  of  the  provi¬ 
sional  committee  was  afterwards  increased  to  thirty-seven, 
conspicuous  among  them  being  John  Bright,  George  Wilson, 
and  Richard  Cobden.  And  the  object  of  the  association  was 
declared  to  be  to  form  a  fund  in  order  to  diffuse  information 
by  lectures  or  pamphlets  on  the  bearing  of  the  corn  laws,  to 
defray  the  expense  of  petitioning,  and  above  all  to  create  an 
organization  to  bring  numbers  together  in  such  force  and 
with  such  energy  of  purpose  as  to  secure  the  great  object, 
namely,  the  complete  freedom  of  trade  and  the  destruction 
not  only  of  the  corn  monopoty,  but  of  all  the  other  monopolies 
bolstered  up  by  this  monster  grievance.  Small  was  the  sup¬ 
port  at  first  obtained  by  this  new  association.  Very  few  then 
appreciated  its  great  moral  importance.  “  For  the  first  two 
or  three  years' of  our  agitation,  ”  said  Mr.  Cobden,  “it  was  a 
very  hopeless  matter,  and  there  was  no  dclat  nor  applause. 
.  .  .  We  sat  in  a  small  room,  and  we  had  a  dingy  red  curtain 
drawn  across  the  room  that  we  might  not  be  chilled  by  the 
paucity  of  our  numbers.  Two  or  three  were  all  that  were 
here  (Newall’s  Buildings)  on  one  occasion,  and  I  recollect 
saying  to  my  friend  Prentice,  4  What  a  lucky  thing  it  is 
the  monopolists  cannot  draw  aside  that  curtain  and  see  how 
many  of  us  there  are,  for  if  they  could  they  would  not  be 
much  frightened.  ’  ”  It  was  not  long,  however,  ere  the 
small  association  began  to  manifest  its  power  and  influence, 
and  when,  aided  by  the  powerful  support  of  some  at  least  of 
the  leading  journals,  its  voice  resounded  through  the  length 

1  The  original  founders  of  the  League  were  John  Benjamin  Smith,  Archi¬ 
bald  Prentice,  Richard  Cobden,  Thomas  Bazley,  William  Rawson,  W.  R.  Cal¬ 
lender,  Ilenry  and  Edmund  Ashworth.  (See  “  Cobden  and  the  League/’  by 
Henry  Ashworth,  Esq.) 


THE  CORN  LAWS. 


215 


and  breadth  of  the  land.  Meetings  and  conferences  then  suc¬ 
ceeded  each  other.  From  the  manufacturing  districts  the 
movement  spread  to  the  metropolis,  and  with  a  clearly  defined 
purpose  in  view,  and  with  the  highest  economic  authorities 
to  appeal  to  in  support  of  their  principles,  the  Anti-Corn  Law 
agitators  made  everywhere  a  profound  and  lasting  impression. 

On  March  12,  1839,  Mr  Villiers  again  brought  the  subject 
of  the  corn  laws  before  the  House  of  Commons,  now,  how¬ 
ever,  backed  by  a  strong  party  both  inside  and  outside  the 
House.  His  motion  was,  “That  this  House  resolve  itself 
into  a  committee  of  the  whole  House,  to  take  into  considera¬ 
tion  the  act  9  George  I Y. ,  regulating  the  importation  of  for¬ 
eign  grain.”  Mr.  Yilliers  showed  that  the  corn  laws  were 
not  beneficial  to  the  agricultural  interest,  and  that  neither 
the  agricultural  laborer  nor  the  farmer  reaped  from  them 
any  benefit.  He  asserted  that  the  community  at  large  suf¬ 
fered  a  loss  through  the  corn  laws,  equal  to  a  poll  tax  of  8s. 
a  head,  or  a  tax  of  £2  on  each  family  in  the  kingdom,  and 
he  demonstrated  that  commerce  and  shipping  were  greatly 
injured  by  them.  Mr.  Yilliers’  motion  was  seconded  by  Sir 
George  Strickland,  and  on  his  side  spoke  Mr.  Poulett 
Thomson,  Sir  William  Molesworth,  Mr.  Grote,  Mr.  Clay, 
Lord  Howick,  Sir  Henry  Parnell,  Mr.  Ward,  Lord  John 
Russell,  Mr.  Hume,  Mr.  Fielden,  and  Mr.  O’Connell;  while 

v 

against  him  were  Sir  James  Graham,  Sir  Robert  Peel,  and 
a  host  of  Conservatives.  The  discussion  was  animated  and 
well  sustained,  and  after  five  whole  nights’  debate  the  votes 
were  taken  and  the  motion  was  lost  by  195  to  342.  In  the 
House  of  Lords  too  a  discussion  was  commenced  on  the  sub¬ 
ject.  On  March  14  the  Earl  of  Fitzwilliam  moved,  “  That 
the  act  9  George  IY.  c.  60,  entitled  ‘An  Act  to  amend  the 
law  relating  to  the  importation  of  corn,  ’  has  failed  to  secure 
that  steadiness  in  the  price  of  grain  which  is  essential  to 
the  best  interests  of  the  country;”  but  the  motion  was  lost 
by  24  against  224.  A  day  after  Lord  Brougham  moved, 
“  That  this  House  do  immediately  resolve  itself  into  a  com¬ 
mittee  of  the  whole  House,  to  take  into  consideration  the 
importation  of  foreign  corn.  ”  But  the  motion  met  a  similar 


216 


ECONOMIC  HISTORY . 


fate,  only  T  having  voted  for  it,  and  61  against  it.  Slow  is 
the  progress  of  any  measure  in  the  House  of  Commons  when 
\  any  substantial  reform  is  contemplated,  but  slower  still  is 
its  advance  in  the  House  of  Lords.  Coming  less  in  contact 
with  the  mass  of  the  people,  comparatively  strangers  to  their 
feelings  and  wants,  conservative  by  interest  and  hereditary 
policy,  the  peers  of  the  realm  are  necessarily  the  last  to  ad¬ 
mit  the  need  of  change,  and  the  last  to  make  concessions  to 
the  altered  exigencies  of  the  times.  Nevertheless,  there  have 
never  been  wanting  enlightened  members  in  the  Upper  House 
who  sought  the  maintenance  and  preservation  of  their  order 
from  that  same  law  of  progress  on  which  all  the  institutions 
of  the  realm  depend,  and  who,  far  from  regarding  their  in¬ 
terests  as  antagonistic  to  those  of  other  classes  of  society,  had 
the  wisdom  to  discern  that  we  are  all  subject  to  the  same 
laws,  influenced  by  the  same  circumstances,  and  alike  bound 
to  obey  those  laws  of  nature  which,  more  than  any  human  con¬ 
trivance,  determine  the  progress  and  prosperity  of  States. 

The  result  of  Mr.  Yilliers’  motion  in  the  House  of  Com¬ 
mons  was  not  likely  to  discourage  the  Anti-Corn  Law  Asso¬ 
ciation.  On  the  contrary,  it  imparted  to  it  a  new  life  and 
a  fresh  impulse.  Determined  to  persevere  till  the  end,  the 
agitators  saw  in  the  strength  of  their  opponents  only  an  ad¬ 
ditional  cause  for  more  energetic  labors.  A  meeting  was 
accordingly  organized  in  London,  and  the  same  voice  which 
first  gave  strength  and  vivacity  to  the  Manchester  gathering 
was  now  heard  exclaiming,  “  We  are  the  representatives  of 
three  millions  of  people,  — a  far  greater  number  of  constitu¬ 
ents  than  the  House  ever  could  boast  of.  We  well  know  that 
no  great  principle  was  ever  indebted  to  Parliament  for  success ; 
the  victory  must  be  gained  out  of  doors.  The  great  towns  of 
Britain  have  extended  the  right  hand  of  fellowship  to  each 
other,  and  their  alliance  will  be  a  Hanseatic  league  against 
the  feudal  corn-law  plunderers.  ”  The  Anti-Corn  Law 
League  was  never  a  political  organization.  For  years  its 
members  went  on  lecturing,  distributing  tracts,  and  acting 
as  a  peripatetic  university  in  instructing  the  people  on  the 
evil  of  commercial  monopoly.  Never  did  they  allow  them- 


THE  CORN  LAWS. 


217 


selves  to  be  tempted  to  other  political  topics.  The  League 
did  not  even  wish  to  interfere  with  the  system  of  taxation 
further  than  extinguishing  at  once  and  forever  the  principle 
of  maintaining  taxes  for  the  benefit  of  a  particular  class.  “  If 
it  be  asked,”  said  Mr.  Cobden,  “why  it  is  that  we,  profess¬ 
ing  to  be  free-traders  in  everything,  should  restrict  the 
title  of  our  association  to  that  of  the  ‘National  Anti-Corn 
Law  League,’  I  will  explain  the  reason.  We  advocate  the 
abolition  of  the  corn  law  because  we  believe  that  to  be  the 
foster-parent  of  all  other  monopolies ;  and  if  we  destroy  that, 
—  the  parent,  the  monster  monopoly,  —  it  will  save  us  the 
trouble  of  destroying  all  the  rest.” 

PART  IV.—  CHAP.  1. 

The  day  arrived  when  the  government  of  the  country  had 
to  be  confided  to  the  great  Conservative  party  in  the  House. 
For  some  time  past  the  administration  of  Lord  Melbourne 
had  shown  unmistakable  signs  of  inherent  weakness,  and  its 
opponents,  counting  among  them  such  men  as  Sir  Robert 
Peel,  Lord  Stanley,  Mr.  Gladstone,  and  Mr.  Disraeli,  were 
decidedly  gaining  strength  and  influence.  The  Conservative 
party  has  been  charged  with  thwarting  and  opposing  the 
liberal  tendencies  of  the  nation,  and  they  certainly  resisted 
the  passing  of  the  Reform  Bill,  the  repeal  of  the  Test  and 
Corporation  Acts,  and  the  Emancipation  of  Roman  Catho¬ 
lics.  Yet  a  memorable  Conservative  administration  is  be¬ 
fore  us,  which  inaugurated  an  era  of  great  prosperity,  and 
one  which,  under  the  presiding  genius  of  Sir  Robert  Peel, 
has  ever  since  been  held  in  grateful  remembrance  for  the  prac¬ 
tical  wisdom  which  it  displayed,  and  the  bold  and  vigorous 
commercial  and  financial  policy  it  carried  into  effect.  Sir 
Robert  Peel  had  already  gained  for  himself  a  high  reputation 
as  a  statesman.1  As  a  member  of  the  Bullion  Committee 

1  Sir  Robert  Peel’s  first  administration  was  a  short  one.  He  formed  his 
Cabinet  on  December  9,  1834,  and  forthwith  dissolved  Parliament.  A  new 
Parliament  was  summoned  to  meet  on  February  19,  1835,  but  an  amendment  to 
the  address  was  carried  in  the  House  of  Commons  on  February  2G,  by  a  ma- 


218 


ECONOMIC  HISTORY. 


of  1810,  as  under-secretary  for  the  colonies  during  the  most 
trying  years  of  the  Continental  War,  as  Secretary  for  Ireland, 
in  all  these  capacities  lie  proved  himself  an  able  minister 
and  an  economist  of  much  practical  wisdom ;  and  it  was  a 
good  omen  for  the  country  when,  in  September,  1841,  at  a 
time  of  much  financial  anxiety,  Sir  Robert  Peel  was  once 
more  called  to  take  the  helm  of  the  State. 

There  was  something  novel  and  encouraging  in  the  speech 
from  the  throne  which  opened  the  labors  of  the  new  admin¬ 
istration.  “  Her  Majesty  is  anxious  that  this  object,  namely, 
the  increase  of  the  public  revenue,  should  be  effected  in  the 
manner  least  burdensome  to  her  people ;  and  it  has  appeared 
to  Her  Majesty,  after  full  deliberation,  that  you  may,  at  this 
juncture,  properly  direct  your  attention  to  the  revision  of 
duties  affecting  the  productions  of  foreign  countries.  It  will 
be  for  you  to  consider  whether  some  of  the  duties  are  not  so 
trifling  in  amount  as  to  be  unproductive  to  the  revenue,  while 
they  are  vexatious  to  commerce.  You  may  further  examine 
whether  the  principle  of  prohibition  in  which  others  of  these 
duties  are  founded,  be  not  carried  to  an  extent  injurious  alike 
to  the  income  of  the  State  and  the  interest  of  the  people.  Her 
Majesty  is  desirous  that  you  should  consider  the  laws  which 
regulate  the  trade  in  corn.  It  will  be  for  you  to  determine 
whether  those  laws  do  not  aggravate  the  natural  fluctuation 
of  supply,  whether  they  do  not  embarrass  trade,  derange  cur¬ 
rency,  and  by  their  operation  diminish  the  comfort  and  in¬ 
crease  the  privations  of  the  great  body  of  the  community.  ” 
Surely  this  was  a  programme  more  liberal  than  could  have 
been  expected  from  a  Conservative  ministry;  but  the  temper 
of  the  people  and  the  exigencies  of  the  time  demanded  that 
and  a  great  deal  more.  Gloom  and  discontent  prevailed  ex¬ 
tensively  throughout  the  manufacturing  districts.  The  Anti- 
Corn-Law  League  had  by  this  time  become  formidable.  The 
demand  was  loud  and  imperious  for  cheap  food,  and  the  total 
repeal  of  the  corn  laws.  And  on  the  day  fixed  for  the  an- 

jority  of  309  to  302.  Other  adverse  divisions  immediately  thereafter  took 
place,  and  Sir  Robert  Peel  announced  his  resignation  of  the  ministry  on 
April  8. 


THE  CORN  LAWS. 


219 


nouncement  of  the  ministerial  measure  some  five  hundred 
deputies  from  the  Anti-Corn-Law  Associations  in  the  me¬ 
tropolis  and  provinces  went  in  procession  to  the  House  of 
Commons,  but  were  refused  admittance.  Yet  with  all  this 
the  government  was  not  disconcerted,  and  with  imperturba¬ 
ble  gravity  on  February  9,  1842,  Sir  Robert  Peel  exposed 
the  policy  of  the  cabinet  on  the  corn  laws. 

At  first  Sir  Robert  Peel  did  not  attach  much  weight  to  the 
influence  of  these  laws.  In  his  speech  in  the  House  he  said 
that  to  his  mind  the  question  was  not  so  much  what  was  the 
price  of  food  as  what  was  the  command  which  the  laboring 
classes  of  the  population  had  of  all  that  constituted  the  en¬ 
joyments  of  life.  His  belief  and  the  belief  of  his  colleagues 
was  that  it  was  important  for  the  country  to  take  care  that 
the  main  source  of  the  supply  of  corn  should  be  derived  from 
domestic  agriculture.  And  he  contended  that  a  certain 
amount  of  protection  was  absolutely  required  for  that  indus¬ 
try.  But  he  made  a  most  important  avowal,  one  which  no 
Protectionist  ministry  had  ever  made,  that  protection  should 
not  be  retained  for  the  special  benefit  of  any  particular  class, 
but  only  for  the  advantage  of  the  nation  at  large,  and  in  so 
far  only  as  was  consistent  with  the  general  welfare  of  all 
classes  of  society.  Sir  Robert  Peel  then  entered  on  the  ex¬ 
tent  of  such  protection,  and  having  taken  54s.  to  58s.  per 
quarter  as  the  price  at  which  corn  should  range  for  a  fair  - 
remuneration  to  the  agriculturist,  he  asked,  Shall  the  corn 
laws  be  based  on  a  sliding  scale,  or  on  a  fixed  duty  ?  Much 
might  be  said  for  the  one  and  for  the  other.  A  sliding  scale 
was  introduced  in  France  in  1819,  one  had  been  adopted 
in  Belgium,  the  Netherlands,  and  other  countries,  and  it 
seemed  to  have  the  advantage  of  adapting  itself  to  every 
circumstance.  But  experience  did  not  confirm  the  hopes 
entertained  of  its  working.  It  did  not  hinder  prices  rising 
higher  than  was  desirable  in  years  of  scarcity;  and  it  had  the 
same  prejudicial  effect  as  every  corn  law  of  causing  the  cul¬ 
tivation  of  land  to  be  regulated,  not  by  its  inherent  capacity, 
but  by  the  amount  of  forced  stimulus  given  to  it  by  the 
Legislature.  Besides  these  radical  defects  the  objections 


220 


ECONOMIC  HISTORY . 


urged  against  the  sliding  scale  were,  that  the  reduction  of 
duty  was  so  rapid  as  to  hold  out  temptation  to  fraud ;  that 
it  operated  as  an  inducement  to  retain  corn,  or  combine  for 
the  purpose  of  influencing  the  averages ;  that  the  rapid  de¬ 
cline  of.  the  duty  was  injurious  to  the  consumer,  the  pro¬ 
ducer,  the  revenue,  and  the  commerce  of  the  country;  that 
ihwas  injurious  to  the  consumer  because  when  corn  was  at  a 
high  price,  say  between  66s.  and  70s.  and  just  when  it  would 
be  for  the  public  advantage  that  corn  should  be  liberated  for 
the  purpose  of  consumption,  the  joint  operation  of  increased 
price  and  diminished  duty  induced  the  holders  to  keep  it 
back  in  the  hope  of  realizing  the  price  of  upwards  of  70s. 
and  so  paying  only  Is.  duty;  that  it  operated  injuriously  to 
the  agricultural  interest,  because  it  held  out  a  temptation  to  'V 
keep  back  corn  until  it  could  be  suddenly  entered  for  con¬ 
sumption  at  the  lowest  amount  of  duty,  when  agriculture 
lost  the  protection  which  the  law  intended  it  should  possess ; 
that  it  was  injurious  to  the  revenue  because  instead  of  corn 
being  entered  for  home  consumption  when  it  arrived,  it  was 
retained  until  it  could  be  introduced  at  Is.  the  revenue  los¬ 
ing  the  difference  between  Is.  and  the  amount  of  duty  which 
would  otherwise  have  been  levied ;  that  it  was  injurious  to 
commerce  because  when  corn  was  grown  at  a  distance,  in 
America,  for  instance,  the  grower  was  subject  to  the  disad¬ 
vantage  that  before  his  cargo  arrived  in  this  country  the 
sudden  entries  of  wheat  at  Is.  duty  from  countries  nearer 
England  might  have  so  diminished  the  price  and  increased 
the  duty  as  to  cause  his  speculation  to  prove  not  only  a  fail¬ 
ure  but  ruinous.  These  were  formidable  objections  to  any 
sliding  scale,  but  between  a  gradual  and  a  fixed  rate  of  duty 
there  was  not  a  material  difference.  On  the  other  hand,  a 
fixed  duty  of  8s.  per  quarter  was  too  low  as  a  protection  in 
time  of  abundance,  and  was  in  effect  a  prohibitory  duty  in 
time  of  scarcity.  Nor  was  it  possible  to  maintain  more  than 
a  nominal  duty  when  prices  began  to  rise.  It  was  indeed 
difficult  to  strike  the  balance  of  advantage  and  inconvenience 
between  the  sliding  scale  and  the  fixed  duty.  So,  on  the 
whole,  Sir  Robert  Peel  favored  the  principle  of  the  sliding 


THE  CORN  LAWS. 


221 


scale,  that  is,  of  making  the  duty  upon  corn  vary  inversely 
with  the  price  in  the  home  market,  taking  the  average  of  the 
market  prices  from  returns  collected  by  excise  officers. 
Having,  therefore,  decided  on  charging  20s.  duty  when  the  < 
average  price  of  wheat  was  50s.  and  51s.  per  quarter,  he 
proposed  to  make  that  duty  fall  by  a  reduction  of  Is.  a 
quarter  as  the  average  price  rose  Is.,  with  some  slight  modi¬ 
fications,  so  that  the  duty  should  be  only  Is.  per  quarter 
when  the  price  of  wheat  rose  to  73s.  a  quarter  and  upwards, 
and  a  bill  so  framed  he  presented  to  the  House  of  Commons. 
The  House  was  not  prepared  at  the  time  for  a  very  liberal 
measure.  Lord  John  Russell  made  a  motion  in  favor  of  a 
fixed  duty,  but  it  was  not  popular;  and  notwithstanding  a 
few  expressions  of  dissatisfaction,  the  Government  proposal 
was  well  received.  Lord  John  Russell’s  amendment  was 
lost  by  226  to  349,  and  Sir  Robert  Peel's  bill  passed  into 
law.1  But  the  country  was  not  satisfied.  Meetings  con¬ 
tinued  to  be  held  in  the  manufacturing  districts,  and  Mr. 
Yilliers,  stimulated  by  the  representations  and  efforts  of  the 
Anti-Corn-Law  League,  again  brought  forward  his  motion 
for  the  total  repeal  of  the  corn  laws,  which  was  again  lost 
by  the  enormous  majority  of  90  to  393.  The  battle  of  the 
corn  laws  had  by  this  time  become  violent  both  in  and  out  of 
Parliament,  and  Mr.  Villiers  was  not  likely  to  be  dispirited 
by  the  result  of  this  division. 

It  is  not,  however,  by  the  vain  attempt  to  render  a  corn 
law  acceptable  that  the  commercial  administration  of  Sir 
Robert  Peel  will  be  remembered.  That  was  at  best  a  tem¬ 
porary  and  transitory  measure.  It  is  when  we  consider  his 
financial  policy  as  a  whole,  and  more  especially  the  plan 
which  he  devised  for  improving  the  state  of  the  finances 
and  imparting  new  life  to  commerce  and  industry,  that  we 
recognize  the  breadth  of  view,  the  sound  wisdom,  and  practi¬ 
cal  knowledge  which  Sir  Robert  Peel  possessed.  For  years 
past  the  finances  of  the  country  had  fallen  into  complete  dis¬ 
order.  An  annual  deficiency  of  one  or  two  millions  had 


1  5  &  G  Viet.  c.  14.  [Table  omitted.] 


222 


ECONOMIC  HISTORY. 


become  a  chronic  evil,  and  no  means  of  escape  presented 
itself.1  With  a  disaffected  people  and  frequent  riots  in  the 
manufacturing  districts,  with  a  paralyzed  trade  and  wages 
reduced  to  a  very  low  scale,  any  idea  of  imposing  new  taxes 
or  making  those  existing  heavier  was  out  of  the  question. 
A  temporary  and  casual  deficiency  might  have  been  met  by 
an  issue  of  exchequer  bills ;  but  what  would  have  been  the 
use  of  resorting  to  such  expedient  when  there  was  no 
ground  whatever  for  expecting  any  immediate  improvement  ? 
On  the  other  hand,  to  have  recourse  to  loans  in  times  of 
peace  in  order  to  balance  the  revenue  and  expenditure  was 
equally  inadmissible.  Sir  Robert  Peel  knew  that  a  timely 
and  moderate  reduction  of  taxes  is  favorable  rather  than 
injurious  to  the  revenue.  He  knew  that  though  for  the 
moment  such  a  reduction  might  show  a  loss,  nevertheless, 
by  the  stimulus  it  affords  to  increasing  consumption,  the 
revenue  would  soon  recover  itself,  and  probably  exceed  the 
amount  previously  produced.  Yet,  unfortunately*  the  few 
precedents  he  had  for  such  an  operation,  attempted  in  times 
not  very  prosperous,  were  not  encouraging.  In  1825  the 
revenue  from  wine  amounted  to  £2, 153, 000.  The  duty  was 
then  reduced  from  9s.  1  \d.  to  4s.  2| d.  per  gallon ;  and  what 
was  the  result  ?  The  year  after  the  revenue  was  <£1,400,000; 
it  afterwards  increased  to  £1,700,000,  but  it  fell  again  to 
£1,400,000.  The  duty  on  tobacco  had  been  reduced  from 
4s.  to  3s.  per  pound.  Before  the  reduction  the  revenue  was 
£3,378,000,  immediately  after  it  fell  to  £2,600,000;  and 
though  it  rose  somewhat  from  that  point,  it  did  not  reach 
the  previous  amount.  -Of  course  the  consumption  of  articles 
of  luxury,  such  as  wine  and  tobacco,  is  not  so  affected  by  a 
reduction  of  duty  as  that  of  tea,  sugar,  and  other  necessaries 
of  life.  Moreover,  the  resources  of  the  country  were  at  that 
time  comparatively  undeveloped,  to  admit  of  any  large  in¬ 
crease  of  consumption.  Still,  such  experience  did  not  war¬ 
rant  the  expectation  that  a  reduction  of  taxes  would  have 
the  effect  of  filling  the  exchequer. 

1  The  deficiency  in  the  year  ended  April  5,  1841,  was  £1,157,601 ;  in  the 
year  ended  April  5,  1842,  £117,627;  and  1843,  £2,704,510. 


THE  CORN  LAWS . 


223 


But  the  circumstances  of  trade  required  instant  relief, 
and  the  tariff  needed  a  thorough  reform  and  simplification. 
Two  years  before,  in  1840,  on  the  motion  of  Mr.  Hume,  a 
committee  of  the  House  of  Commons  was  appointed  to  in¬ 
quire  into  the  duties  levied  on  imports,  and  to  determine 
how  far  they  were  imposed  for  purposes  of  revenue ;  and  in 
their  report  the  committee  said:  “The  tariff  of  the  United 
Kingdom  presents  neither  congruity  nor  unity  of  purpose ; 
no  general  principles  seem  to  have  been  applied.  The  tariff 
often  aims  at  incompatible  ends;  the  duties  are  sometimes 
meant  to  be  both  productive  of  revenue  and  for  protection, 
objects  which  are  frequently  inconsistent  with  each  other. 
Hence  they  sometimes  operate  to  the  complete  exclusion  of 
foreign  produce,  and  in  so  far  no  revenue  can  of  course  be 
received ;  and  sometimes  when  the  duty  is  inordinately  high 
the  amount  of  revenue  is  in  consequence  trifling.  They  do 
not  make  the  receipt  of  revenue  the  main  consideration,  but 
allow  that  primary  object  of  fiscal  regulations  to  be  thwarted 
by  the  attempt  to  protect  a  great  variety  of  particular  inter¬ 
ests  at  the  expense  of  revenue,  and  of  the  commercial  in¬ 
tercourse  with  other  countries.  While  the  tariff  has  been 
made  subordinate  to  many  small  producing  interests  at  home 
by  the  sacrifice  of  revenue  in  order  to  support  their  interest, 
the  same  principle  of  interference  is  largely  applied  by  the 
various  discriminating  duties  to  the  produce  of  our  colonies, 
by  which  exclusive  advantages  are  given  to  the  colonial  in¬ 
terests  at  the  expense  of  the  mother  country.  ”  Such  were 
the  general  features  of  the  tariff,  the  result  of  years  of  care¬ 
less  legislation  on  the  subject.  The  fact  was  indeed  too 
evident  that  it  was  necessary  to  prune  the  over-burdened 
tariff,  and  to  liberate  a  large  variety  of  articles  from  the 
needless  trammels  of  legislation. 

But  how  to  accomplish  this  without  a  handsome  surplus 
revenue  ?  Fortunately  Sir  Robert  Peel,  undeterred  by  the 
state  of  the  revenue,  determined  to  do  what  was  neces¬ 
sary  for  trade.  And  he  acted  wisely.  Untrammel  indus¬ 
try  from  the  bonds  of  legal  restrictions,  open  the  avenue 
to  wealth  and  prosperity, —  that  is  the  right  policy.  Pur- 


224 


ECONOMIC  HISTORY. 


sue  this  course  and  there  is  no  fear  but  the  revenue  will 
set  itself  speedily  right.  Some  slight  reductions  he  made 
in  1841,  but  on  March  11,  1842,  in  his  famous  financial 
statement,  he  proposed  to.  reduce  considerably  all  the 
duties  on  the  raw  materials  of  manufacture,  all  duties 
on  goods  partially  or  wholly  manufactured,  as  well  as 
the  duties  on  timber,  and  all  export  duties,  together 
producing  XI,  500, 000;  and  to  make  up  this  loss,  and  to 
provide  for  the  original  deficit  in  the  revenue,  amount¬ 
ing  to  X  2,570,000,  by  an  income  and  property  tax  of 
Id.  in  the  pound,  which  he  expected  would  produce 
£3,700,000  ;J  by  the  equalization  of  the  stamp  and  spirit 
duties,  which  would  give  X400,000;  and  by  a  small  tax  on 
the  exportation  of  coals,  which  would  give  X200,000, —  mak¬ 
ing  in  all  X4, 310, 000.  It  was  a  very  simple  plan;  yet 
there  was  profound  wisdom  in  Sir  Robert  Peel’s  budget. 
The  value  of  the  reductions  proposed  far  exceeded  the 
amount  of  relief  in  taxation  they  each  and  collectively 
afforded.  The  removal  of  the  taxes  on  raw  materials  was  a 
great  boon,  inasmuch  as  they  had  the  effect  of  putting  our 
manufactures  in  a  disadvantageous  position  in  the  markets 
of  the  world,  and  restricting  the  field  for  the  employment  of 
capital  and  labor.  As  was  said  in  the  discussion  on  the 
budget,  suppose  50,000  head  of  cattle  were  to  be  annually 
imported  in  consequence  of  such  remissions,  such  importa¬ 
tion  would  produce  but  a  small  effect  on  the  price  of  meat, 
but  it  would  create  an  import  trade  to  the  amount  of  half  a 
million  of  money,  a  trade  which,  in  its  nature,  would  tend 
to  produce  an  export  trade  in  return  of  an  equal  amount. 
Our  export  trade  is  measured  and  limited  by  our  import 
trade.  If  an  individual  merchant  cannot  afford  to  send  his 
goods  to  other  countries  without  obtaining  any  return, 
neither  can  all  merchants  collectively,  and  the  country  as  a 
whole  afford  to  export  commodities  to  foreign  countries,  if 

1  The  amount  of  duty  assessed,  in  1843,  was  £5,608,348.  The  amount  of 
property  assessed  was:  Schedule  A,  £95,284,497;  Schedule  B,  £46,769,915; 
Schedule  C,  £27,909,793;  Schedule  D,  £71,330,344;  Schedule  E,  £9,718,454. 
Total,  £251,013,003.  [Additional  note  omitted.] 


THE  CORN  LAWS. 


225 


in  some  shape  or  other  imports  are  not  received  from  those 
countries  in  return.  Reduce  the  duties  on  imports,  and  you 
thereby  promote  the  export  of  our  produce  and  manufactures. 
Remove  those  taxes  which  burden  our  manufactures  and  you 
promote  the  importation  of  those  articles  which  are  neces¬ 
sary  to  the  comfort  and  welfare  of  the  nation.  The  income 
tax  might  be  odious,  “inquisitorial,  intolerable,”  yet  it  was 
at  that  time  the  only  means  by  which  the  necessary  reforms 
in  the  tariff  could  be  attempted.  And  the  nation,  having 
balanced  the  evil  and  the  good  of  the  proposal,  and  having 
found  that  the  advantages  preponderated,  cheerfully  accepted 
the  government  proposal,  and  gave  to  the  proposal  its  hearty 
consent. 

The  commercial  policy  thus  inaugurated  by  Sir  Robert 
Peel,  being  in  perfect  accord  with  sound  economic  princi¬ 
ples,  could  not  fail  to  be  successful.  From  1841  to  1843,  as 
we  have  seen,  there  was  a  yearly  deficit  in  the  budget.  In 
the  year  ending  April  5,  1844,  Sir  Robert  Peel  found  him¬ 
self  in  possession  of  a  handsome  surplus  of  <£2,600,000, 
which  was  exceeded  in  the  following  year,  and  continued  at 
a  high  point  for  four  consecutive  years.1-  The  exports  of 
British  produce,  which  in  1842  had  fallen  to  £47,000,000 
increased  to  £52,000,000  in  1843;  to  £58,000,000  in  1844; 
and  £60,000,000  in  1845.  The  shipping  entered  and  cleared 
increased  from  9,000,000  tons  in  1842  to  12,000,000  tons  in 

s 

1845.  In  every  way,  financially  and  commercially,  the  re¬ 
sults  fully  realized  the  anticipations  formed,  and  Sir  Robert 
was  encouraged  to  advance  still  further  in  the  same  direc¬ 
tion.  Nothing  important  was  attempted  in  the  budget  of 
1843, 2  but  in  1844  the  duty  on  wool  was  abolished,  the 
duties  on  currants  and  coffee  were  reduced,  and  a  great 
change  was  made  on  the  duties  on  marine  insurance.  And 
then,  as  we  have  seen  in  the  previous  chapter,  the  differential 
duties  against  foreign-grown  sugar  were  relaxed  by  permit¬ 
ting  the  importation  of  sugar,  the  growth  of  China,  Java,  or 

& 

1  The  surplus  in  the  year  ended  April  5,  1844,  was  £2,685,125;  1845, 
£3,027,615;  1846,  £1,647,324;  and  in  1847,  £2,823,762. 

2  [Foot-note  on  “  Taxes  Reduced  or  Repealed,”  omitted.] 


226 


ECONOMIC  HISTORY. 


Manilla,  or  of  any  other  countries  which  Her  Majesty  in 
council  shall  have  declared  to  be  admissible  at  moderate 
rates.  In  1845  another  still  more  important  series  of  re¬ 
forms  was  introduced.  The  duty  on  cotton  wool,  which, 
however  slight  and  inappreciable  on  the  coarser  material, 
pressed  rather  heavily  on  the  finer  muslin,  was  abolished. 
The  export  duty  on  coals,  which  had  been  found  vexatious 
and  injurious  was  removed.  The  timber  duties  were  further 
reduced.  The  duty  on  glass  was  removed  from  the  tariff, 
and  also  the  duties  on  four  hundred  and  thirty  articles, 
which  produced  little  or  no  revenue,  including  fibrous  mate¬ 
rials  such  as  silk,  hemp,  and  flax,  furniture,  woods,  cabinet¬ 
makers’  materials,  animal  and  vegetable  oil,  ores  and 
minerals,  etc.  In  1846  the  liberal  policy  was  further  ex¬ 
tended.  Hitherto  our  manufacturers  had  been  benefited 
by  the  free  access  granted  to  the  raw  materials.  It 
was  right  to  ask  of  them  to  relinquish  some,  at  least,  of 
the  protecting  duties  still  in  existence.  And  the  duties 
on  linen,  woollen,  and  cotton  manufactures  were  reduced 
from  20  to  10  per  cent.  The  silk  duties  then  at  30  per 
cent  were  also  reduced  to  15  per  cent.  A  reduction  was 
made  on  the  duties  on  stained  paper,  on  manufactures  of 
metals,  earthenware,  on  carriages,  and  on  manufactures 
of  leather;  and  the  duties  on  butter,  cheese,  and  hops  were 
further  reduced.1 

But  was  it  right  to  effect  all  these  reforms  without  asking 
for  reciprocity  on  the  part  of  foreign  countries  ?  For  years 
past  it  was  known  that  Her  Majesty’s  government  had  used 
every  effort  to  enter  into  treaties  with  several  States,  such 
as  Brazil,  Portugal,  Spain,  and  France,  with  a  view  to 
the  adoption  of  mutual  concessions.  In  1843  and  1844 
Mr.  Ricardo  brought  the  subject  before  the  House  of  Com¬ 
mons,  and  moved  for  an  address  to  Her  Majesty,  praying 
that  Her  Majesty  be  pleased  to  give  directions  to  her  ser¬ 
vants  not  to  enter  into  any  negotiations  with  foreign  powers 

1  In  1842  there  were  1,090  articles  and  subdivisions  of  articles  charged  with 
distinct  rates  of  import  duty  in  the  customs  tariff.  In  1846  the  number  was 
reduced  to  424. 


THE  CORN  LAWS. 


227 


which  would  make  any  contemplated  alterations  of  the  tariff 
of  the  United  Kingdom  contingent  on  the  alterations  of  the 
tariff  of  other  countries;  and  expressing  to  Her  Majesty  the 
opinion  of  the  House,  that  the  great  object  of  relieving 
the  commercial  intercourse  between  this  country  and  foreign 
nations  from  all  injurious  restrictions  would  be  best  promoted 
by  regulating  our  own  customs  duties,  as  might  be  most 
suitable  to  the  financial  and  commercial  interests  of  this 
country,  without  reference  to  the  amount  of  duties  which 
foreign  powers  might  think  it  expedient  for  their  own  in¬ 
terest  to  levy  on  British  goods.  But  the  government  opposed  \ 
the  motion,  and  Mr.  Ricardo  was  defeated.  Mr.  Gladstone 
especially  defended  the  policy  of  endeavoring  to  obtain  such 
treaties.  He  did  not  wish,  he  said,  “  to  be  trammelled  by 
an  abstract  proposition,  and  unless  Mr.  Ricardo  could  show 
that  there  were  no  possible  circumstances  in  which  a  com¬ 
mercial  treaty  could  be  aught  other  than  evil,  he  had  no 
right  to  call  upon  the  House  to  affirm  his  resolution.  ”  The 
government,  however,  now  practically  acted  on  the  policy 
advocated  by  Mr.  Ricardo,  and  Sir  Robert  Peel  avowed  it 
frankly. 

“I  have  no  guarantee,”  he  said,1  “to  give  you  that  other 
countries  will  immediately  follow  our  example.  I  give  you 
that  advantage  in  the  argument.  Wearied  with  our  long 
and  unavailing  efforts  to  enter  into  satisfactory  commercial 
treaties  with  other  nations,  we  have  resolved  at  length  to  con¬ 
sult  our  interests,  and  not  to  punish  other  countries  for  the 
wrong  they  do  us  in  continuing  their  high  duties  upon  the 
importation  of  our  products  and  manufactures,  by  continu¬ 
ing  high  duties  ourselves,  encouraging  unlawful  trade.  We 
have  had  no  communication  with  any  foreign  government 
upon  the  subject  of  these  reductions.  We  cannot  promise 
that  France  will  immediately  make  a  corresponding  reduction 
in  her  tariff.  I  cannot  promise  that  Russia  will  prove  her 
gratitude  to  us  for  our  reduction  of  duty  on  her  tallow  by 
any  diminution  of  her  duties.  You  may,  therefore,  say  in 


1  Hansard’s  Debates,  Jan.  27,  1846. 


228 


ECONOMIC  HISTORY. 


opposition  to  the  present  plan,  4  What  is  this  superfluous 
liberality,  that  you  are  going  to  do  away  with  all  these 
duties,  and  yet  you  expect  nothing  in  return  ?  ’  I  may  per¬ 
haps  be  told  that  many  foreign  countries  since  the  former 
relaxation  of  duties  on  our  part,  —  and  that  would  be  per¬ 
fectly  consistent  with  the  fact, — 'foreign  countries  which 
have  been  benefited  by  our  relaxations,  have  not  followed  our 
example ;  nay,  have  not  only  not  followed  our  example,  but 
have  actually  applied  to  the  importation  of  British  goods 
higher  rates  of  duties  than  formerly.  I  quite  admit  it.  I 
give  you  all  the  benefit  of  that  argument.  I  rely  upon  that 
fact  as  conclusive  proof  of  the  policy  of  the  course  we  are 
pursuing.  It  is  a  fact  that  other  countries  have  not  followed 
our  example,  and  have  levied  higher  duties  in  some  cases  upon 
our  goods.  But  what  has  been  the  result  upon  the  amount 
of  your  exports  ?  You  have  defied  the  regulations  of  these 
countries.  Your  export  trade  is  greatly  increased.  Now, 
why  is  that  so  ?  Partly  because  of  your  acting  without  wish¬ 
ing  to  avail  yourselves  of  their  assistance,  partly  because  of 
the  smuggler,  not  engaged  by  you,  in  so  many  continental 
countries,  whom  the  strict  regulations  and  the  triple  duties 
which  are  to  prevent  the  ingress  of  foreign  goods  have  raised 
up,  and  partly  perhaps  because  these  very  precautions  against 
the  ingress  of  your  commodities  are  a  burden,  and  the  taxa¬ 
tion  increasing  the  cost  of  production  disqualify  the  foreigner 
from  competing  with  you.  But  your  exports,  whatever  be 
the  tariff  of  other  countries,  or  however  apparent  the  ingrati¬ 
tude  with  which  they  have  treated  you,  your  export  trade 
has  been  constantly  increasing.  By  the  remission  of  your 
duties  upon  the  raw  material,  by  inciting  your  skill  and  in¬ 
dustry,  by  competition  with  foreign  goods  you  have  defied 
your  competitors  in  foreign  markets,  and  you  have  been 
enabled  to  exclude  them.  Notwithstanding  their  hostile 
tariffs  the  declared  value  of  British  exports  has  increased 
above  £  10, 000, 000  during  the  period  which  has  elapsed  since 
the  relaxation  of  duties  on  your  part.  I  say,  therefore,  to 
you  that  these  hostile  tariffs,  so  far  from  being  an  objection 
to  continuing  your  policy,  are  an  argument  in  its  favor.  But, 


THE  CORN  LAWS. 


229 


depend  upon  it,  your  example  will  ultimately  prevail.  When 
your  example  could  bn  quoted  in  favor  of  restriction,  it  was 
quoted  largely.  When  your  example  can  be  quoted  in  favor 
of  relaxation  as  conducive  to  your  interest,  it  may,  perhaps, 
excite  at  first  in  foreign  governments,  in  foreign  boards  of 
trade  but  little  interest  or  feeling;  but  the  sense  of  the  peo¬ 
ple  of  the  great  body  of  consumers  will  prevail,  and  in  spite 
of  the  desire  of  government  and  boards  of  trade  to  raise 
revenue  by  restrictive  duties,  reason  and  common  sense  will 
induce  relaxation  of  high  duties.  That  is  my  firm  belief.  ” 

PART  IV.  — CHAP.  4. 

The  Anti-Corn-Law  agitation  was  one  of  those  movements 
which,  being  founded  on  right  principles,  and  in  harmony 
with  the  interest  of  the  masses,  was  sure  to  gather  fresh 
strength  by  any  event  affecting  the  supply  of  food.  It  was 
popular  to  attempt  to  reverse  a  policy  which  aimed  almost 
exclusively  to  benefit  one  class  of  society.  It  was  well 
known  that  the  League  wanted  to  outset  an  economic  fallacy, 
and  that  they  wished  to  relieve  the  people  from  a  great  bur¬ 
den.  And  as  time  elapsed  and  the  soundness  of  the  princi¬ 
ples  propounded  by  the  League  at  their  public  meetings  was 
more  and  more  appreciated,  their  triumph  became  certain, 
and  Her  Majesty’s  government  itself  began  to  see  that  it  was 
no  longer  possible  to  treat  the  agitation  either  by  a  silent 
passiveness  or  by  expressed  contempt.  The  economic  theo¬ 
rists  had  the  mass  of  the  people  with  them.  Their  gather¬ 
ings  were  becoming  more  and  more  enthusiastic.  And  even 
amidst  Conservative  landowners  there  were  not  a  few  enlight¬ 
ened  and  liberal  minds  who  had  already,  silently  at  least, 
espoused  the  new  ideas.  No  change  certainly  could  be  ex¬ 
pected  so  long  as  bread  was  cheap  and  labor  abundant.  But 
when  a  deficient  harvest  and  a  blight  in  the  potato-crop  crip¬ 
pled  the  resources  of  the  people  and  raised  grain  to  famine 
prices,  the  voice  of  the  League  acquired  greater  power  and 
influence.  Hitherto  they  had  received  hundreds  of  pounds. 
Now  thousands  were  sent  in  to  support  the  agitation.  A 


230 


ECONOMIC  HISTORY. 


quarter  of  a  million  was  readily  contributed.  Nor  were  the 
contributors  Lancashire  mill-owners  exclusively.  Among 
them  were  merchants  and  bankers,  \men  of  heart  and  men  of 
mind,  jbhe  poor  laborer  and  the  peer  of  the  realm.  The  fer¬ 
vid  oratory  of  Bright,  the  demonstrative  and  argumentative 
reasoning  of  Cobden,  the  more  popular  appeals  of  Fox, 
Rawlins,  and  other  platform  speakers,  filled  the  newspaper 
press  and  were  eagerly  read.  And  when  Parliament  dis¬ 
solved  in  August,  1845,  even  Sir  Robert  Peel  showed  some 
slight  symptoms  of  a  conviction  that  the  days  of  the  corn 
laws  were  numbered.  Every  day  in  truth  brought  home  to 
his  mind  a  stronger  need  for  action,  and  as  the  ravages  of 
the  potato  disease  progressed  he  saw  that  all  further  resist¬ 
ance  would  be  absolutely  dangerous. 

A  cabinet  council  was  held  on  October  81  of  that  year  to 
consult  as  to  what  was  to  be  done,  and  at  an  adjourned  meet¬ 
ing  on  November  5  Sir  Robert  Peel  intimated  his  intention 
to  issue  an  order  in  council  remitting  the  duty  on  grain  in 
bond  to  one  shilling,  and  opening  the  ports  for  the  admission 
of  all  species  of  grain  at  a  smaller  rate  of  duty  until  a  day  to 
be  named  in  the  order;  to  call  Parliament  together  on  the 
27th  inst.,  in  order  to  ask  for  an  indemnity  and  a  sanction  of 
the  order  by  law ;  and  to  submit  to  Parliament,  immediately 
after  the  recess,  a  modification  of  the  existing  law,  includ¬ 
ing  the  admission,  at  a  nominal  duty,  of  Indian  corn  and  of 
British  colonial  corn.  A  serious  difference  of  opinion,  how¬ 
ever,  was  found  to  exist  in  the  cabinet  on  the  question 
brought  before  them,  —  the  only  ministers  supporting  such 
measures  being  the  Earl  of  Aberdeen,  Sir  James  Graham, 
and  Mr.  Sidney  Herbert.  Nor  was  it  easy  to  induce  the 
other  members  to  listen  to  reason.  And  though,  at  a  subse¬ 
quent  meeting  held  on  November  28,  Sir  Robert  Peel  so  far 
secured  a  majority  in  his  favor,  it  was  evident  that  the  cabi¬ 
net  was  too  divided  to  justify  him  in  bringing  forward  his 
measures,  and  he  decided  upon  resigning  office. 

His  resolution  to  that  effect  having  been  communicated  to 
the  Queen,  Her  Majesty  summoned  Lord  John  Russell  to 
form  a  cabinet;  and  to  smooth  his  path,  Sir  Robert  Peel, 


THE  CORN  LAWS. 


281 


with  characteristic  frankness,  sent  a  memorandum  to  Her 
Majesty  embodying  a  promise  to  give  him  his  support.  But 
Lord  John  Russell  failed  in  his  efforts,  and  the  Queen  had 
no  alternative  but  to  recall  Sir  Robert  Peel  and  give  him 
full  power  to  carry  out  his  measures.  It  was  under  such 
circumstances  that  Parliament  was  called  for  January  22, 
1846,  and  on  January  2T  the  government  plan  was  pro¬ 
pounded  before  a  crowded  House.  It  was  not  an  immediate 
repeal  of  the  corn  laws  that  Sir  Robert  Peel  recommended. 
He  proposed  a  temporary  protection  for  three  years  till  Feb- 
rurary  1,  1849,  imposing  a  scale  during  that  time  ranging 
from  4s.  when  the  price  of  wheat  should  be  50s.  per  quarter 
and  upward,  and  10s.  when  the  price  should  be  under  48s. 
per  quarter,  and  that  after  that  period  all  grain  should  be 
admitted  at  the  uniform  duty  of  Is.  per  quarter.  The  meas¬ 
ure,  as  might  have  been  expected,  was  received  in  a  very 
different  manner  by  the  political  parties  in  both  Houses  of 
Parliament.  There  was  treason  in  the  Conservative  camp, 
it  was  said,  and  keen  and  bitter  was  the  opposition  offered 
to  the  ehief  of  the  party.  For  twelve  nights  speaker  after 
speaker  indulged  in  personal  recriminations.  They  recalled 
to  Sir  Robert  Peel’s  memory  the  speeches  he  had  made  in 
defence  of  the  corn  laws.  And  as  to  his  assertion  that  he 
had  changed  his  mind,  they  denied  his  right  to  do  so.  Mr. 
Colquhoun  “wondered  that  Sir  Robert  could  say,  4  I  have 
changed  my  opinion,  and  there  is  an  end  of  it. ’  But  there 
was  not  an  end  of  it.  His  right  honorable  friend  must  not 
forget  the  laws  by  which  the  words  of  men  of  genius,  whether 
orators  or  poets,  are  bound  up  with  them.  His  right  honor¬ 
able  friend’s  words  could  not  thus  pass  away.  They  were 
winged  shafts  that  pierced  many  minds.  They  remained 
after  the  occasion  which  produced  them  passed  away.  His 
right  honorable  friend  must  remember  that  the  words  which 
he  had  used  adhered  to  the  memory,  moulded  men’s  senti¬ 
ments,  guided  public  opinion.  He  must  recollect  that  the 
armor  of  proof  which  he  had  laid  aside,  and  the  lance  which 
he  had  wielded,  and  with  which  he  had  pierced  many  an 
encumbered  opponent,  remained  weighty  and  entire.  Greatly 


232 


ECONOMIC  HISTORY. 


did  he  wish  that  his  right  honorable  friend  were  again  on 
this  side  to  wield  them,  that  he  were  here  to  lead  their  ranks 
and  guide  them  by  his  prowess.  But  if  not,  they  retained  at 
least  his  arms ;  these  lay  at  their  feet,  strewed  all  around 
them,  an  arsenal  of  power.”  Petulant  remonstrances  like 
these  were  of  course  of  little  avail.  Sir  Robert  Peel  and 
Mr.  Cobden  were  ready  to  meet  every  challenge,  and  to  re¬ 
fute  every  argument  with  their  unanswerable  logic  of  facts. 
And  when  the  opposition  endeavored  to  throw  all  the  respon¬ 
sibility  of  a  measure  of  such  a  character  on  the  prime  minis¬ 
ter,  Mr.  Cobden  besought  them  to  turn  from  the  will  of  one 
individual  to  those  laws  economic  and  divine  which  seemed 
to  impose  the  duty  of  laying  wide  open  the  door  for  the  im¬ 
portation  of  food.  “  Oh,  then  divest  the  future  prime  minis¬ 
ter  of  this  country  of  that  odious  task  of  having  to  reconcile 
rival  interests ;  divest  the  office,  if  ever  you  would  have  a 
sagacious  man  in  power  as  prime  minister,  divest  it  of  the  re¬ 
sponsibility  of  having  to  find  food  for  the  people !  May  you 
never  find  a  prime  minister  again  to  undertake  that  awful 
responsibility !  That  responsibility  belongs  to  the  law  of  na¬ 
ture.  As  Burke  said,  4  it  belongs  to  God  alone  to  regulate  the 
supply  of  the  food  of  nations.’  ...  We  have  set  an  example 
to  the  world  in  all  ages ;  we  have  given  them  the  representa¬ 
tive  system.  The  very  rules  and  regulations  of  this  House 
have  been  taken  as  the  model  for  every  representative  assem¬ 
bly  throughout  the  whole  civilized  world ;  and  having  besides 
given  them  the  example  of  a  free  press,  and  civil  and  relig¬ 
ious  freedom,  and  every  institution  that  belongs  to  freedom 
and  civilization,  we  are  now  about  giving  a  still  greater  ex¬ 
ample  ;  we  are  going  to  set  the  example  of  making  industry 
free,  to  set  the  example  of  giving  the  whole  world  every  ad¬ 
vantage  of  clime  and  latitude  and  situation,  relying  ourselves 
on  the  freedom  of  our  industry.  Yes,  we  are  going  to  teach 
the  world  that  other  lesson.  Don’t  think  there  is  anything 
selfish  in  this,  or  anything  at  all  discordant  with  Christian 
principles.  I  can  prove  that  we  advocate  nothing  but  what 
is  agreeable  to  the  highest  behests  of  Christianity.  To  buy 
in  the  cheapest  market  and  sell  in  the  dearest.  What  is  the 


THE  CORN  LAWS. 


233 


meaning  of  the  maxim  ?  It  means  that  you  take  the  article 
which  you  have  in  the  greatest  abundance,  and  with  it 
obtain  from  others  that  of  which  they  have  the  most  to 
spare,  so  giving  to  mankind  the  means  of  enjoying  the  full¬ 
est  abundance  of  earth’s  goods,  and  in  doing  so  carrying  out 
to  the  fullest  extent  the  Christian  doctrine  of  ‘  Do  ye  to  all  / 
men  as  ye  would  they  should  do  unto  you.  ’  ”  The  passing 
of  the  measure  was,  however,  more  than  certain,  and  after  a 
debate  of  twelve  nights’  duration  on  Mr.  Miles’s  amendment, 
the  government  obtained  a  majority  of  97,  337  having  voted 
for  the  motion,  and  240  against  it.  And  from  that  evening 
the  corn  law  may  be  said  to  have  expired.1  Not  a  day  too 
soon  certainly,  when  we  consider  the  straitened  resources 
of  the  country  as  regards  the  first  article  of  food,  caused  not 
only  by  the  bad  crop  of  grain,  but  by  the  serious  loss  of  the 
potato  crop,  especially  in  Ireland. 

Ireland  has  often  grievously  suffered  from  social  and 
political  wrongs,  from  absenteeism  and  repeal  cries,  from 
Protestant  and  Roman  Catholic '  bigotry,  from  Orangeism 
and  Ribbon  ism,  from  threatening  notices  and  mid-day  assas¬ 
sinations,  but  seldom  has  her  cup  of  adversity  been  so  brim¬ 
ful  as  in  1845  and  1846,  from  the  failure  of  the  potato  crop. 
Though  comparatively  of  recent  introduction,  the  first  potato 
root  having  been  imported  by  Sir  Walter  Raleigh  in  1610, 
potatoes  had  for  years  constituted  a  large  proportion  of  the 
food  of  the  people  of  Ireland.  A  considerable  acreage  of 
land  was  devoted  to  that  culture,  and  an  acre  of  potatoes 
would  feed  more  than  double  the  number  of  individuals  that 
can  be  fed  from  an  acre  of  wheat.  Such  cultivation  was, 
moreover,  very  attractive  to  small  holders  of  land.  It  cost 
little  labor.  It  entailed  scarcely  any  expense,  and  little  or 
no  care  was  bestowed  on  it,  since  the  people  were  quite 
satisfied  with  the  coarsest  and  most  prolific  kind,  called 
lumpers  or  horse  potatoes.  Nor  was  it  the  food  of  the  people 
only  in  Ireland.  Pigs  and  poultry  shared  the  potatoes  with 
the  peasant’s  family,  and  often  became  the  inmates  of  his 

1  9  and  10  Viet.  c.  22,  suspended  by  10  and  11  Yict.  c.  1. 


234 


ECONOMIC  HISTORY. 


cabin  also.  One  great  evil  connected  with  potato  culture  is 
4  that,  while  the  crop  is  precarious  and  uncertain,  it  cannot 
be  stored  up.  The  surplus  of  one  abundant  year  is  quite  un¬ 
fit  to  use  in  the  next,  and  owing  to  its  great  bulk  it  cannot 
even  be  transported  from  place  to  place.  Moreover;  once 
used  to  a  description  of  food  so  extremely  cheap,  no  retrench¬ 
ment  is  possible,  and  when  blight  comes  and  the  crop  is 
destroyed  the  people  seem  doomed  to  absolute  starvation. 
This,  unfortunately,  was  the  case  in  1822  and  1831.  In 
those  years  public  subscriptions  were  got  up,  kings  letters 
issued,  balls  and  bazaars  held,  and  public  money  granted. 
But  in  1845  and  1846  the  calamity  was  greater  than  any 
previously  experienced. 

The  potato  disease  first  manifested  itself  in  1845.  The 
early  crop,  dug  in  September  and  October,  which  consists  of 
one  sixth  of  the  whole,  nearly  escaped ;  but  the  whole  of  the 
late  crop,  the  people’s  crop,  dug  in  December  and  January, 
was  tainted  before  arriving  at  maturity.  In  that  year  there 
was  a  full  average  crop  of  wheat.  Oats  and  barley  were 
abundant,  and  turnips,  carrots,  and  greens,  including  hay, 
were  sufficient.  Yet  on  the  continent  the  rye  crop  failed, 
and  the  potato  disease  appeared  in  Belgium,  Holland, 
France,  and  the  west  of  Germany.  On  the  whole  the  supply 
of  grain  was  fair  during  the  year  1845,  and  prices  ruled  mod¬ 
erately  high.  In  1846,  however,  the  blight  attacked  the 
potatoes  with  even  greater  fury  and  suddenness  in  the  month 
of  July,  and  it  attacked  both  the  early  crop  and  the  people’s 
crop  at  the  same  time  that  the  wheat  crop  proved 'under  an 
average.  Barley  and  oats  were  also  deficient,  and  the  rye 
crop  again  failed  on  the  Continent.  In  the  previous  year 
some  counties  in  Ireland  escaped  the  potato  disease,  but  this 
year  the  whole  country  suffered  alike.  The  loss  was  indeed 
very  great.  Probably  £13,000,000  was  a  low  estimate,  and 
from  4,000,000  to  5,000,000  quarters  of  grain  at  least  would 
be  required  to  replace  it.  As  might  be  expected  the  news 
of  such  a  disaster  had  a  fearful  effect  throughout  the  coun¬ 
try,  and  the  utter  helplessness  of  many  millions  of  our 
fellow-subjects  became  a  subject  of  the  greatest  anxiety. 


THE  CORN  LAWS. 


235 


As  soon  as  the  potato  disease  appeared  in  1845,  govern¬ 
ment  took  the  step  of  appointing  professors  Kane,  Lindley, 
and  Playfair  to  inquire  into  the  nature  of  the  disease,  and  to 
suggest  means  for  preserving  the  stock,  but  this  was  of  little 
avail.  Urged  by  necessity,  the  government  even  stepped 
out  of  its  province  and  sent  orders  to  the  United  States  for 
the  purchase  of  £100,000  worth  of  Indian  corn,  established 
depots  in  different  parts,  and  formed  relief  committees. 
But  this  was  nothing  compared  with  what  became  necessary 
to  be  done  in  1846.  Public  works  were  then  commenced  on 
a  large  scale,  giving  employment  to  some  five  hundred  thou-  \ 
sand  persons.  The  poor  law  was  put  in  action  with  unparal¬ 
leled  vigor,  so  that  in  July,  184T,  as  many  as  three  millions 
of  persons  were  actually  receiving  separate  rations.  A  loan 
of  <£8,000,000  was  contracted  by  the  government,  expressly 
to  supply  such  wants,  and  every  step  was  taken  by  two  suc¬ 
cessive  administrations  —  Sir  Robert  Peel’s  and  Lord  John 
Russell’s  —  to  alleviate  the  sufferings  of  the  people.  Nor 
was  private  benevolence  lacking.  The  Society  of  Friends, 
always  ready  in  acts  of  charity  and  love,  was  foremost  in  the 
good  work.  A  British  Association  was  formed  for  the 
relief  of  Ireland,  including  Jones  Loyd  (Lord  Overstone), 
Thomas  Baring,  and  Baron  Rothschild.  A  Queen's  letter 
was  issued.  A  day  of  general  fast  and  humiliation  was  held, 
and  subscriptions  were  received  from  almost  every  quarter 
of  the  world.  The  Queen’s  letter  alone  produced  £171,533. 
The  British  Association  collected  £263,000;  the  Society  of 
Friends,  £43,000;  and  £168,000  more  were  intrusted  to  the 
Dublin  Society  of  Friends.  The  Sultan  of  Turkey  sent 
£1,000.  The  Queen  gave  £2,000  and  £500  more  to  the 
British  Ladies’  clothing  fund.  Prince  Albert  gave  £500. 
The  National  Club  collected  £17,930.  America  sent  two 
ships  of  war,  the  “  J amestown  ”  and  “  Macedonian  ”  full  of 
provisions;  and  the  Irish  residents  in  the  United  States  sent 
upwards  of  £200,000  to  their  relatives  to  allow  them  to  emi¬ 
grate.  But  with  all  this,  the  people  passed  through  a  most 
eventful  catastrophe.  One  third  of  the  people  at  least  was 
reduced  to  destitution.  A  large  number  died  by  fever  and 


236 


ECONOMIC  HISTORY. 


pestilence.  Such  as  could  raise  the  recpiisite  funds  emi¬ 
grated  to  America.  Crowds  of  emaciated  and  famished 
people  flocked  by  every  available  means  to  English  ports. 
The  rest  were  kept  alive  by  employment  on  public  works,  by 
private  local  charity,  by  local  subscriptions,  by  contribu¬ 
tions  from  all  parts  of  the  world,  and  by  the  most  extensive 
system  of  gratuitous  distribution  of  food  which  history 
affords  any  record  of. 

The  price  of  wheat  and  other  grain  did  not  rise  much  at 
first.  Indeed  for  a  lengthened  time  but  faint  conception  was 
entertained  of  any  want  of  foreign  grain.  The  potato  failure 
was  comparatively  a  new  thing,  and  few  imagined  that  it 
would  act  powerfully  on  the  consumption  of  grain.  In  1845 
the  average  price  of  wheat  was  no  more  than  50s.  lid.  per 
imperial  quarter,  it  having  risen  from  a  minimum  of  45s. 
3d.  in  March  to  58 s  lOd.  in  November;  while  the  average 
price  of  barley  was  31s.  8d.  and  of  oats  22s.  6d.  In  1846, 
also  the  average  price  of  wheat  was  54s.  8d.,  the  price  having 
ruled  first  55s.  6d.,  falling  to  46s.  3d.  in  August,  and  rising 
to  60s.  7d.  in  November,  while  the  average  price  of  barley 
was  32s.  8d.  and  of  oats  23s.  8 d.  But  in  1847  a  sudden  great 
rise  took  place.  The  price  of  wheat  rose  from  an  average  of 
69s.  lid.  in  January  to  an  average  of  92s.  lOd.  in  June;  the 
price  of  barley  was  50s.  2d.  in  January,  53s.  5d.  in  Febru¬ 
ary,  and  52 s.  lid.  in  May  and  June;  and  oats,  commencing 
at  29s.  6d.  in  January,  rose  to  34s.  2d.  in  June.  In  July, 
however,  a  sudden  change  took  place  by  the  concurrent  ac¬ 
tion  of  large  importations  and  excellent  prospects  of  the 
approaching  harvest.  From  June  to  December  wheat  fell 
from  92s.  lOd.  to  52s.  3d.  ;  barley  from  52s.  lid.  to  30s. 
9d.  ;  and  oats  from  34s.  2d.  to  21s.  lOd.  per  imperial 
quarter.  The  importation  of  grain  had  never  been  so  large 
as  in  this  year.  In  former  years  1,000,000  or  2,000,000 
quarters  was  the  maximum,  but  in  1846  the  imports 
amounted  to  4,752,174  quarters  of  grain  and  meal,  and  in 
1847  to  as  much  as  11,912,864  quarters,  the  greatest  in¬ 
crease  having  taken  place  from  Russia  and  America.  Then, 
indeed,  the  nation  realized  that  the  corn  law  could  not  be 


THE  CORN  LA  WS. 


237 


maintained  any  longer.  Our  dependence  on  foreign  grain 
became  very  great,  and  thankful  indeed  we  were  that  by  the 
wisdom  and  foresight  of  our  legislators,  the  last  corn  law  and 
the  navigation  law  were  alike  suspended,  and  our  ports  were 
opened  to  the  supply  of  food  from  any  quarter  of  the  globe. 

Another  important  consequence  of  the  potato  disease  was 
an  enormous  stimulus  to  emigration.  Great  is  the  change  in 
the  state  of  public  opinion  and  law  as  respects  emigration. 
In  olden,  yet  not  very  remote  times,  an  absolute  prohibition 
existed  against  the  departure  of  artisans  from  this  country, 
and  we  would  have  regarded  as  a  dire  misfortune  the  depart¬ 
ure  of  hundreds  and  thousands  of  families  from  our  shores 
in  quest  of  happier  homes  and  more  fruitful  sources  of  indus¬ 
try.  Now  we  see  whole  fleets  of  emigrant  ships  carrying 
away  many  of  the  ablest  and  most  industrious  of  our  work¬ 
ing  population,  without  a  murmur  of  complaint  or  a  feeling 
of  sorrow.  And  why  ?  because  we  feel  that  they  only  obey 
the  law  of  nature,  which  is  always  foreseeing  and  beneficent. 
Even  savages  are  impelled  by  their  economical  condition  to 
be  always  moving  in  quest  of  food;  and  when  civilization 
created  new  wants,  a  still  greater  impulse  wTas  given  to 
migrations  from  place  to  place.  Sometimes  religious  and 
political  dissensions  have  been  the  causes  of  great  emigra¬ 
tion.  But  motion  is  a  law  of  human  society,  and  endless 
processions  are  always  moving,  now  from  south  to  north, 
and  anon  from  north  to  south ;  at  one  time  from  west  to  east, 
and  at  another  from  aast  to  west.  As  for  this  country  the 
constant  alternation  of  times  of  prosperity  and  distress  in 
commerce  and  manufactures  renders  it  the  more  necessary 
for  our  working  people  to  have  other  outlets  for  their  indus¬ 
tries  than  are  afforded  within  these  circumscribed  islands, 
and  it  is  fortunate  that  the  colonies  are  ever  open  for  the 
employment  of  any  number  of  laborers.  As  early  as  1826 
and  1827  the  subject  of  emigration  engaged  the  attention  of 
the  House  of  Commons,  and  their  recommendation  was  that 
the  emigrants  should  be  settled  upon  land  granted  by  the 
State,  and  that  whatever  fund  be  advanced  for  their  benefit 
should  be  subject  to  repayment.  In  1831  a  royal  commis- 


238 


ECONOMIC  HISTORY. 


sion  inquired  into  the  subject,  and  while  it  did  not  approve 
of  an}r  direct  grant  of  money  for  emigration  to  Canada  and 
other  North  American  colonies,  it  recommended  that  as  re¬ 
spects  New  South  Wales  and  Yan  Diemen’s  Land  the  pro¬ 
ceeds  of  public  land  sold  should  he  devoted  as  loans  of  £20 
and  upwards  towards  the  passage  money  of  families  of  me¬ 
chanics  and  agricultural  laborers,  and  as  bounties  of,  and 
towards  the  conveyance  of,  young  unmarried  females.  This 
recommendation  was  subsequently  adopted  and  carried  out 
by  the  colonial  office,  and  then  a  loan  for  the  Australian 
emigrants  was  converted  into  a  free  gift  and  increased  to 
£30,  the  bounty  to  single  females  being  also  increased  to 
£30.  But  notwithstanding  tliese  encouragements,  the  emi¬ 
gration  from  the  United  Kingdom  continued  very  limited  for 
a  long  time.  For  sixteen  years,  from  1815  to  1830,  the 
average  number  of  emigrants  was  only  23,000  per  annum, 
most  of  whom  went  to  the  North  American  colonies  and  the 
United  States  of  America.  From  1831  to  1840  the  average 
number  of  emigrants  increased  to  70,000  per  annum,  Aus¬ 
tralia  then  commencing  to  attract  great  attention ;  and  from 
1841  to  1846  the  average  still  further  increased  to  100,000. 
But  in  1847  and  subsequent  years  the  stream  of  emigration 
flowed  in  a  most  rapid  manner.  Ireland  sent  forth  the 
greater  part  of  her  laboring  population,  and  in  the  decennium 
from  1847  to  1856  the  number  of  emigrants  actually  in¬ 
creased  to  280,000  per  annum.  It  was  a  pitiful  sight  to  see 
those  crowds  of  worn-out  Irish  embarking  in  rags  and  penni¬ 
less  for  a  foreign  shore.  But  they  went  away  from  a  place 
of  sorrow  and  suffering  to  a  country  which  seemed  to  open 
a  boundless  held  for  the  exercise  of  honest  industry.  Nor 
was  the  benefit  of  emigration  limited  to  the  emigrants  them¬ 
selves.  The  advantage  was  quite  as  great  to  the  mother 
country.  Here  they  added  nothing  to  national  wealth. 
They  constituted  the  mortified  part  of  the  social  system 
which  needed  amputation.  There,  not  only  they  ceased  to 
trench  upon  the  labor  of  others,  but,  after  providing  food 
for  themselves  they  became  large -customer^  for  our  produce 
and  manufactures. 


THE  CORN  LAWS. 


289 


Ere  we  pass  from  the  repeal  of  the  corn  law  and  its  conse¬ 
quences,  reference  must  be  made  to  an  achievement  certainly 
not  less  important  in  relation  to  the  economic  policy  of  the 
country,  the  repeal  of  the  navigation  law.  In  1845  these 
laws  were  consolidated,  and  it  seemed  as  if  they  were  to 
continue  for  many  a  year  in  existence,  but  the  necessity  for 
suspending  their  operation  in  1846  and  1847,  and  the  pro¬ 
gress  of  public  opinion  in  matters  of  free  trade  suggested 
an  inquiry  into  the  operation  and  policy  of  such  laws  in 
1847.  Of  that  committee  Mr.  Milner  Gibson  was  chairman, 
and  during  the  year  they  published  five  reports  on  the 
subject  containing  valuable  evidence,  tending  to  show  the  ob¬ 
jections  to  such  laws  and  the  injury  which  they  caused,  not¬ 
withstanding  their  restricted  operation, —  a  large  portion  of 
the  trade  being  no  longer  protected  by  them.  Evidence  was 
given  to  the  effect  that,  looking  to  the  geographical  position 
of  this  country,  and  to  the  peculiar  energy  of  her  people,  the 
extent  of  her  trade,  her  great  capital,  and  her  success  in 
maritime  enterprise,  there  need  be  no  limit  to  the  prosperity 
of  her  shipping  were  it  not  for  the  restrictions  and  unneces¬ 
sary  charges  imposed  on  it  by  the  Navigation  Act,  the  Regis¬ 
try  Act,  and  several  other  acts.  It  was  urged  that  if  we 
could  reduce  the  cost  of  ships  and  consequently  of  freights, 
we  should  increase  trade  to  an  enormous  extent;  that  the 
immense  traffic  which  railways  occasioned  in  this  country 
was  the  strongest  proof  that  cheap  conveyance  on  the  sea 
would  be  attended  with  similar  results,  and  that  we  should 
not  only  obtain  a  much  larger  quantity  of  goods  than  have 
hitherto  come  to  market,  but  that  wre  should  find  new  ex¬ 
changeable  commodities  which  did  not  then  come  here ;  that 
we  should  bring  the  timber  of  India  or  Australia  at  half  its 
present  cost ;  and  that  we  should  carry  on  the  fisheries  to  a 
much  greater  extent,  and  be  enabled  to  increase  every  branch 
of  industry  in  this  and  other  countries  to  a  very  large  extent. 
Shipowners  certainly  prognosticated  all  manner  of  evil 
likely  to  arise  from  the  repeal  of  the  navigation  laws.  They 
warned  the  nation  that  such  laws  had  raised  it  to  the  station 
it  held,  and  that  without  them  it  would  as  rapidly  go  down 


240 


ECONOMIC  HISTORY . 


as  it  had  risen.  They  were  certain  that  the  repeal  of  such 
laws  would  reduce  shipping  property  fully  30  per  cent  in 
value,  and  introduce  the  cheap  navigation  of  other  countries 
in  competition  with  the  costly  navigation  of  this  country, 
and  that,  despairing  of  success,  the  British  shipowner  must 
retire  from  the  contest.  Really,  however,  the  advocates  of 
the  navigation  laws  had  little  to  say  in  their  favor  based  on 
substantial  facts.  The  committee  made  no  report  in  1847, 
but  the  general  impression  was  that  the  repeal  of  such  laws 
would  benefit  trade,  and  that  the  necessity  for  action  had 
become  imminent. 

Accordingly,  in  1848,  as  soon  as  public  attention  could  be 
given  to  the  subject,  Mr.  Labouchere,  in  committee  of  the  whole 
house,  moved  a  resolution  to  the  effect,  “  That  it  is  expedient 
to  remove  the  restrictions  which  prevent  the  carriage  of  goods 
by  sea  to  and  from  the  United  Kingdom  and  the  British  pos¬ 
sessions  abroad,  and  to  amend  the  laws  regulating  the  coast¬ 
ing  trade  of  the  United  Kingdom,  subject,  nevertheless,  to 
such  control  as  may  be  necessary,  and  also  to  amend  the  laws 
for  the  registration  of  ships  and  seamen.”  But  a  concerted 
opposition  was  made  to  such  proposition,  and  Mr.  Herries 
moved  a  counter  resolution,  “That  it  is  essential  to  the 
national  interest  of  the  country  to  maintain  the  fundamental 
principles  of  the  navigation  laws,  subject  to  such  modifica¬ 
tions  as  may  be  best  calculated  to  obviate  any  proved  incon¬ 
venience  to  the  commerce  of  the  United  Kingdom  and  its 
dependencies,  and  without  danger  to  our  national  strength.” 
The  discussion  was  long  and  animated,  and  the  two  oppos¬ 
ing  views  were  fully  enforced  and  illustrated;  but  it  ended, 
as  might  have  been  expected,  in  the  defeat  of  Mr.  Herries’ 
amendment  by  a  majority  of  294  against  177.  But  the  ses¬ 
sion  was  lost,  and  the  subject  had  to  be  deferred  to  another 
year.  Again,  however,  in  1849  Mr.  Labouchere  proposed 
the  same  resolution,  only  adding  that  provision  should  be 
made  giving  power  to  the  Queen  in  council  to  re-enact  these 
laws,  wholly  or  in  part,  with  regard  to  any  countries  as  to 
which  the  government  might  think  fit  that  they  should  he 
preserved.  Power  was  given  to  him  to  bring  in  a  bill,  and 


THE  CORN  LA  WS. 


241 


it  was  read  a  second  time  by  a  majority  of  266  to  210.  As 
originally  proposed  the  bill  was  intended  to  throw  open  the 
coasting  trade  as  well  as  the  foreign  trade,  but  the  govern¬ 
ment  of  the  United  States  having  notified  their  refusal  to 
reciprocate  this  concession,  and  some  objection  having  been 
raised  by  the  department  of  customs  because  of  the  difficulty 
of  enforcing  effectual  regulations  to  guard  the  revenue  from 
danger,  the  clauses  relating  to  the  coasting  trade  were  with¬ 
drawn,  and  the  bill  passed  into  law.1  But  even  the  restric¬ 
tion  of  the  coasting  trade  was  ultimately  relinquished,  and 
both  the  navigation  on  the  coast  of  the  United  Kingdom  and 
the  manning  of  British  ships  were  left  entirely  free.2 


1  12  and  13  Viet.  c.  29. 

2  16  and  17  Viet.  c.  107,  and  17  and  18  Viet.  c.  120. 


212 


ECONOMIC  HISTORY. 


X. 


THE  NEW  GOLD. 


From  ‘Cairnes’  Essays  in  Political  Economy.1 

ESSAY  II.  — THE  COURSE  OF  DEPRECIATION. 

0  one,  I  think,  who  has  attended  to  the  discussions 


1  N  occasioned  by  the  recent  gold  discoveries,  can  have 
failed  to  observe,  on  the  part  of  a  large  number  of  those 
who  engage  in  them,  a  strange  unwillingness  to  recognize, 
among  the  inevitable  consequences  of  those  events,  a  fall 
in  the  value  of  money.  I  say,  a  strange  unwillingness,  be¬ 
cause  we  do  not  find  similar  doubts  to  exist  in  anv  corre- 

4/ 

sponding  case.  With  respect  to  all  other  commodities,  it 
is  not  denied  that  whatever  facilitates  production  promotes 
cheapness ;  that  less  will  be  given  for  objects  when  they  can 
be  attained  with  less  trouble  and  sacrifice.  It  is  not  denied, 
for  example,  that  the  steam-engine,  the  spinning-jenny,  and 
the  mule  have  lowered  the  value  of  our  manufactures ;  that 
railways  and  steamships  have  lessened  the  expense  of  travel¬ 
ling,  or  that  the  superior  agricultural  resources  of  foreign 
countries,  made  available  through  free  trade,  keep  down  the 
price  of  our  agricultural  products.  It  is  only  in  the  case  of 
the  precious  metals  that  it  is  supposed  that  a  diminution  of 
cost  has  no  tendency  to  lower  value,  and  that,  however 
rapidly  supply  may  be  increased,  a  given  quantity  will  con¬ 
tinue  to  command  the  same  quantity  of  other  things  as  before. 

Among  persons  unacquainted  with  economic  science,  the 
prevalence  of  this  opinion  is  doubtless  principally  due  to 
those  ambiguities  of  language,  and  consequent  confusion  of 
ideas,  with  which  our  monetary  phraseology,  unfortunately, 


1  London  :  McMillan  and  Co.,  1873. 


THE  NEW  GOLD. 


243 


abounds,  many  of  which  tend  to  encourage  the  notion  of  some 
peculiar  and  constant  stability  in  the  value  of  the  precious 
metals.  Thus,  the  expression  “  a  fixed  price  of  gold  ”  has  led 
some  people  to  imagine  that  the  possibility  of  a  depreciation 
of  this  metal  is  precluded  by  our  mint  regulations.  The 
double  sense,  again,  of  the  phrase,  “  value  of  money,”  has 
countenanced  the  same  error  ;  for  people,  perceiving  the  rate 
of  interest  (which  is  the  measure  of  the  value  of  money,  in 
one  sense  of  the  phrase)  remaining  high,  while  the  supply  of 
gold  was  rapidly  increasing,  —  perceiving  money  still  scarce 
according  to  this  criterion,  notwithstanding  the  increase  in  its 
production,  —  have  asked  whether  this  did  not  afford  a  pre¬ 
sumption  that  its  value  would  be  permanently  preserved  from 
depreciation,  a  bank  rate  of  discount  at  6,  8,  or  10  per  cent, 
as  they  remarked,  affording  small  indication  of  money  becom¬ 
ing  too  abundant. 

It  appears  to  me,  however,  that  misconceptions  respecting 
the  influence  of  an  increased  supply  of  gold  upon  its  value, 
and  upon  general  prices,  are  by  no  means  confined  to  the  class 
who  could  be  misled  by  such  fallacies,  but  that  even  among 
economists  (at  least  among  economists  in  this  country)  we  may 
observe  the  same  indisposition  to  believe  in  an  actual  and  pro¬ 
gressive  depreciation  of  this  metal.  It  is  not,  indeed,  denied 
—  at  least,  I  presume  it  is  not  denied  —  by  any  one  pretend¬ 
ing  to  economic  knowledge,  that  the  enlarged  production  of 
gold  now  taking  place  has  a  tendency  to  lower  its  value ;  but 
it  seems  to  be  very  generally  supposed  that  the  same  cause  — 
the  increased  gold  production  —  has  the  effect,  through  its 
influence  on  trade,  of  calling  into  operation  so  many  tenden¬ 
cies  of  a  contrary  nature  that,  on  the  whole,  the  depreciation 
must  proceed  with  extreme  slowness,  the  results  being  dis¬ 
persed  over  a  period  so  great  as  to  take  from  them  any  prac¬ 
tical  importance,  and  that,  at  all  events,  up  to  the  present 
time  no  sensible  effect  upon  prices  proceeding  from  this  cause 
lias  become  perceptible. 

The  existence  of  this  opinion  among  economists  is,  I  appre¬ 
hend,  to  be  attributed  in  some  degree  to  the  circumstance  that 
so  few  have  taken  the  pains  to  compare  the  actual  prices  of 


244 


ECONOMIC  HISTORY. 


the  present  time  with  those  of  the  period  previous  to  the  gold 
discoveries,  but  much  more  to  the  fact  that  the  character  of 
the  new  agency  and  the  mode  of  its  operation  are  not,  in 
general^  correctly  conceived.  I  believe  the  most  general 
opinion  with  reference  to  the  action  of  an  increased  supply 
of  money  upon  its  value  is,  that  it  is  uniform,  takes  place, 
that  is  to  say,  in  the  same  degree  in  relation  to  all  commodi¬ 
ties  and  services,  and  that  therefore  prices,  so  far  as  they  are 
influenced  by  an  increase  of  money,  must  exhibit  a  uniform 
advance ; 1  and,  no  such  uniformity  being  observed  in  the 
actual  movement  of  prices,  the  inference  has  not  unnaturally 
been  drawn  that  such  enhancement  as  has  taken  place  is  not 
due  to  this  cause ;  that  it  is  not  money  which  has  fallen,  but 
commodities  which  have  risen  in  value. 

Now  I  am  quite  prepared  to  admit  that  an  increase  of 
money  tends  ultimately,  where  the  conditions  of  production 
remain  in  other  respects  the  same,  to  affect  the  prices  of  all 
commodities  and  services  in  an  equal  degree ;  but  before  this 
result  is  attained  a  period  of  time,  longer  or  shorter  according 
to  the  amount  of  the  augmentation  and  the  general  circum¬ 
stances  of  commerce,  must  elapse.  In  the  present  instance 
the  additions  which  are  being  made  to  the  monetary  systems 
of  the  world  are  upon  an  enormous  scale,  and  the  disturbance 
effected  in  the  relation  of  prices  is  proportionally  great. 
Under  such  circumstances  it  is  very  possible  that  the  inequali¬ 
ties  resulting  may  not  find  their  correction  throughout  the 
whole  period  of  progressive  depreciation,  —  a  period  which, 
even  with  our  present  facilities  of  production  and  distribution, 
may  easily  extend  over  some  thirty  or  forty  years.  During 
this  transitionary  term  the  action  of  the  new  gold  will  not  be 
uniform,  but  partial.  Certain  classes  of  commodities  and 
services  will  be  affected  much  more  powerfully  than  others. 
Prices  generally  will  rise,  but  with  unequal  steps.  Neverthe- 

1  “  In  relation  to  the  influence  of  the  gold  discoveries  on  the  prices  of  agri¬ 
cultural  produce,  it  is  plain  that  it  could  be  only  the  same  upon  them  as  upon 
those  of  any  other  class  of  commodities.  If  it  has  caused  a  rise  of  20  per  cent  in 
their  favor ,  it  must  have  caused  a  rise  of  20  per  cent  in  everything  else.”  (“  Times,” 
City  article,  August  6,  1852.)  And  the  same  assumption,  either  expressed  or  im¬ 
plied,  runs  through  most  of  the  reasoning  which  I  have  seen  on  this  question. 


THE  NEW  GOLD. 


245 


less  there  will  be  in  these  apparent  irregularities  nothing 
either  capricious  or  abnormal.  The  movement  will  be  gov¬ 
erned  throughout  its  course  by  economic  laws ;  and  it  is  the 
purpose  of  the  present  inquiry  to  ascertain  the  nature  of 
these  laws  and  the  mode  of  their  operation. 

The  process  by  which  an  increased  production  of  gold  oper¬ 
ates  in  depreciating  the  value  of  the  metal  and  raising  general 
prices  appears  to  be  twofold :  it  acts,  first,  directly  through 
the  medium  of  an  enlarged  money  demand,  and  secondly, 
indirectly  through  a  contraction  of  supply.1 

When  an  increased  amount  of  money  comes  into  existence, 
there  is,  of  course,  an  increased  expenditure  on  the  part  of 
those  into  whose  possession  it  comes,  the  immediate  effect  of 
which  is  to  raise  the  prices  of  all  commodities  which  fall  under 
its  influence.  It  is  obvious,  however,  that  the  advance  in 
price  which  thus  occurs  will  be,  in  its  full  extent,  temporary 
only ;  since  it  is  immediately  followed  by  an  extension  of  pro¬ 
duction  to  meet  the  increased  demand,  and  this  must  again 
lead  to  a  fall  in  price.  Some  writers  who  have  treated  this 
question,  observing  this  effect,  have  somewhat  hastily  con¬ 
cluded  that  under  the  operation  of  this  principle  the  level  of 
prices  would  never  permanently  be  altered,  since,  as  they 
have  urged,  each  addition  to  the  circulating  medium  forming 
the  basis  of  a  corresponding  increase  of  demand,  gives  a 
corresponding  impetus  to  production  ;  every  increase  of 
money  thus  calls  into  existence  an  equivalent  augmentation 
in  the  quantity  of  things  to  be  circulated ;  and  the  proportion 
between  the  two  not  being  ultimately  disturbed,  prices,  it  may 
be  presumed,  will  return  to  their  original  level.2  The  least 

1  According  to  Mr.  Newmarch  (“History  of  Prices,”  vol.  iv.,  pp.  224-225), 
the  depreciation  of  money  may  occur  by  a  process  which  is  neither  of  these, 
when  money  operates  upon  prices  neither  through  demand  nor  yet  through 
supply,  but  “by  reason  of  augmented  quantity.”  I  must  confess  myself  wholly 
unable  to  conceive  the  process  here  indicated. 

2  [It  may  be  worth  while  to  preserve  a  specimen  of  the  sort  of  Political 
Economy  that  was  talked  and  written  on  this  subject  some  fifteen  years  ago. 
A  leading  article  in  the  Examiner  (December  13,  1856)  contains  the  following: 
“The  additional  supply  of  the  precious  metals  has  stimulated  the  industry  of 
the  world,  and  in  fact  produced  an  amount  of  wealth  in  representing  which 
they  have  been  themselves,  as  it  were,  absorbed.  .  .  .  But  the  produce  of 


246 


ECONOMIC  HISTORY. 


reflection,  however,  will  show  that  this  doctrine  has  been 
suggested  by  a  very  superficial  view  of  the  phenomena. 

For  —  not  to  press  the  obvious  reductio  ad  absurdum  to 
which  this  argument  is  liable  —  how  is  this  extension  of  pro¬ 
duction  to  be  carried  out  ?  In  the  last  resort  it  is  only  possible 
through  a  more  extended  employment  of  labor.  But,  when 
once  all  the  hands  in  a  community  are  employed,  the  effect  of 
a  further  competition  for  labor  can  only  be  to  raise  wages  ; 
and,  wages  once  being  generally  raised,  it  is  plain  (supposing 
all  other  things  to  remain  the  same)  that  profits  can  only  be 
maintained  by  a  corresponding  elevation  of  prices.  When, 
therefore,  the  influence  of  the  new  money  has  once  reached 
wages,  it  is  evident  that  there  will  be  no  motive  to  continue 
production  to  that  point  which  would  bring  prices  to  their 
former  level,  and  that  consequently  an  elevation  of  price  must, 
at  this  stage  of  the  proceeding,  be  permanently  established. 

So  far  as  regards  articles  which  fall  directly  under  the 
action  of  the  new  money.  With  respect  to  those  which  do 
not  happen  to  come  within  the  range  of  the  new  demand, 
price  is,  I  conceive,  in  their  case  raised  by  an  indirect  action 
of  the  new  money  in  curtailing  supply. 

We  have  seen  that  the  effect  of  the  efforts  to  extend  pro¬ 
duction  in  the  directions  indicated  by  the  new  expenditure 
must  be  to  raise  wages;  but  it  is  plainly  impossible  that  wages 
should  continue  to  advance  in  any  of  the  principal  depart¬ 
ments  of  industry  without  affecting  their  rates  in  the  rest ; 
whence  it  will  happen  that,  under  the  operation  of  the  new 
monetary  influence,  some  departments  of  industry  will  expe¬ 
rience  a  rise  of  wrages  before  any  advance  takes  place  in  the 
prices  of  the  new  commodities  produced  by  the  laborers  whose 
wrages  have  risen.  It  is  evident  that  in  all  departments  of 
industry  which  may  be  thus  affected  —  in  which  prices  will 
not  have  shared  the  advance  which  has  affected  wages  — 

the  Australian  and  Californian  gold,  as  well  as  that  of  silver  which  has  accom¬ 
panied  it,  is  likely  to  go  on  ;  and  it  may  be  asked  if  this  must  not  in  course  of 
time  produce  depreciation.  We  think  it  certainly  is  not  likely  to  do  so;  .  .  . 
on  the  contrary,  it  will  surely  be  absorbed  by  increasing  wealth  and  population 
as  fast  as  it  is. produced.”] 


THE  NEW  GOLD. 


247 


profits  will  fall  below  the  general  average  ;  the  effect  of  which 
must  be  to  discourage  production  until,  by  a  contraction  in 
the  supply  of  the  articles  thus  furnished,  the  price  shall  be 
raised  up  to  that  point  which  will  place  the  producers  on  the 
same  footing  of  advantage  as  those  in  other  walks  of  industry. 

An  increased  supply  of  money  thus  tends,  by  one  mode  of 
its  operation,  to  raise  prices  in  advance  of  wages,  and  thus  to 
stimulate  production ;  by  another,  to  raise  wages  in  advance 
of  prices,  and  thus  to  check  it ;  in  both,  however,  to  raise 
wages,  and  thus  ultimately  to  render  necessary,  in  order  to 
the  maintenance  of  profits,  a  general  and  permanent  elevation 
of  price.1 

This  being  the  process  by  which  increased  supplies  of 
money  operate  in  raising  prices,  in  order  to  ascertain  the 
laws  of  their  advance,  we  must  attend,  first,  to  the  direction 
of  the  new  expenditure ;  secondly,  to  the  facilities  for  extend¬ 
ing  the  supply  of  different  kinds  of  commodities  ;  and,  thirdly, 
to  the  facilities  for  contracting  it. 

With  regard  to  the  first  point,  —  the  direction  of  the  new 
expenditure,  —  this  will  naturally  be  determined  by  the  habits 
and  tastes  of  the  persons  into  whose  possession  the  new  money 
comes.  These  persons  are  the  inhabitants  of  the  gold  coun¬ 
tries,  and,  after  them,  those  in  other  countries  who  can  best 
supply  their  wants.  Speaking  broadly,  we  may  say  that  the 
persons  who  will  chiefly  benefit  by  the  gold  discoveries  belong 
to  the  middle  and  lower  ranks  of  society ;  in  a  large  degree  to 
the  lowest  rank,  the  class  of  unskilled  laborers.  The  direction 
of  the  new  expenditure  will  consequently  be  that  indicated  by 
the  habits  and  tastes  of  these  classes,  and  the  commodities 

1  It  must  not  be  supposed  that  this  is  inconsistent  with  the  fundamental  doc¬ 
trine  maintained  by  Ricardo,  that  “high  wages  do  not  make  high  prices/' 
That  doctrine  assumes  the  value  of  money  to  be  constant.  Ricardo  was  quite 
aware  of  the  exception  to  the  general  principle,  and  points  it  out  in  the  follow¬ 
ing  passage :  — 

“  Money,  being  a  variable  commodity,  the  rise  of  money  wages  will  be  fre¬ 
quent^  occasioned  by  a  fall  in  the  value  of  money.  A  rise  of  wages  from  this 
cause  will,  indeed,  be  invariably  accompanied  by  a  rise  in  the  price  of  commod¬ 
ities;  but  in  such  cases  it  will  be  found  that  labor  and  all  commodities  have 
not  varied  in  regard  to  each  other,  and  that  the  variation  has  been  confined  to 
money."  (Ricardo’s  Works,  second  edition,  p.  31.) 


248 


ECONOMIC  HISTORY. 


which  will  be  most  affected  by  it  will  be  those  which  fall  most 
largely  within  their  consumption. 

With  respect,  secondly,  to  facilities  for  extending  supply, 
these  will  be  found  to  depend  principally  upon  two  circum¬ 
stances  :  first,  on  the  extent  to  which  machinery  is  employed 
in  production;  and,  secondly,  on  the  degree  in  which  the  pro¬ 
cess  of  production  is  independent  of  natural  agencies  which 
require  time  for  accomplishing  their  ends.  The  distinction 
marked  by  these  two  conditions,  it  will  be  found,  corresponds 
pretty  accurately  with  two  other  distinctions, —  with  the  dis¬ 
tinction,  namely,  between  raw  and  manufactured  products ; 
and,  among  raw  products,  with  that  between  those  derived  from 
the  animal  and  those  derived  from  the  vegetable  kingdom.  An 
article  of  finished  manufacture,  in  the  production  of  which  ma¬ 
chinery  bears  a  principal  part,  and  which  is  independent,  or 
nearly  so,  of  natural  processes,  may  after  a  short  notice  be 
rapidly  multiplied  to  meet  any  probable  extension  of  demand. 
An  article  of  raw  produce,  being  in  a  less  degree  under  the  do¬ 
minion  of  machinery,  and  depending  more  upon  natural  pro¬ 
cesses  which  require  time  for  their  accomplishment,  cannot 
be  increased  with  the  same  facility ;  and  production  will  con¬ 
sequently,  in  this  case,  be  comparatively  slow  in  overtaking 
an  extension  of  demand.  But  of  raw  products,  those  derived 
from  the  animal  are  still  less  under  the  dominion  of  machinery 
than  those  derived  from  the  vegetable  kingdom,  and  still  more 
dependent  on  the  slow  processes  of  nature,  and,  consequently, 
production  must,  in  their  case,  be  still  more  tardy  in  over¬ 
taking  demand.  Supposing,  then,  the  extension  of  demand  to 
be  in  all  three  cases  the  same,  the  immediate  rise  of  price 
will,  cceteris  paribus,  be  in  all  the  same;  but  in  the  case  of 
articles  of  finished  manufacture,  this  rise  will  be  quickly  cor¬ 
rected  by  the  facilities  available  for  increased  production, 
while  in  raw  vegetable  products  the  correction  will  take  place 
more  slowly,  and  in  raw  animal  products  more  slowly  still.1 

1  The  following  passage  occurs  in  the  “History  of  Prices,”  vol.  vi.,  p.  170: 
“  The  groups  of  commodities  which  exhibit  the  most  important  instances  of  a 
rise  of  price  are  the  raw  materials  most  extensively  used  in  manufactures,  and 
the  production  of  which  does  not  admit  of  rapid  extension ;  and,  second,  the 


THE  NEW  GOLD. 


249 


But,  thirdly,  I  said  that  the  progress  of  prices  under  the 
influence  of  the  gold  supplies  would  be  governed  by  the  facil¬ 
ity  with  which  supply  can  be  contracted.  Every  one  who  has 
practical  experience  of  manufacturing  operations  is  aware 
that,  when  capital  has  once  been  embarked  in  any  branch  of 
production,  it  cannot  at  once  be  removed  to  a  different  one 
the  moment  the  needs  of  society  may  require  a  change ; 
whence  it  happens  that,  on  any  sudden  change  taking  place 
in  the  direction  of  a  nation’s  expenditure,  or  when  from  mis¬ 
calculation  production  has  been  extended  beyond  existing 
wants,  producers  frequently  choose  to  continue  their  business 
at  diminished  profits  or  even  at  a  positive  loss,  rather  than 
incur  still  greater  damage  by  suffering  their  capital  to  lie  idle, 
or  by  attempting  to  transfer  it  suddenly  into  some  new  branch 
of  production.  The  supply  of  a  commodity  is  not  therefore 
always,  or  generally,  at  once  contracted  on  the  demand  for  it 
falling  off,  or  on  its  production  becoming  less  profitable,  and, 
where  this  is  so,  it  is  evident  that  prices  must  at  times 
continue  depressed  below  the  normal  level ;  the  duration  of 
the  depression  depending  on  the  length  of  time  required  to 
effect  a  transference  of  the  unproductive  capital  to  some  more 
lucrative  investment.  Now,  the  difficulty  of  accomplishing 
this  will  generally  be  in  direct  proportion  to  the  amount  of 


groups  of  commodities  in  which  there  is  little,  if  any,  rise  of  price  in  1857,  as 
compared  with  1851,  are  articles  of  colonial  and  tropical  produce,  the  supply 
of  which,  drawn  from  a  variety  of  sources,  does  admit  of  being  considerably 
and  expeditiously  enlarged. ”  The  fact  of  the  rise  of  price  in  raw  materials  is 
here  admitted,  though,  in  ascribing  that  rise,  as  by  implication  the  passage 
does,  to  the  paucity  of  the  sources  of  supply,  the  explanation  is,  as  I  conceive, 
erroneous.  The  sources,  for  example,  from  which  tea  and  sugar  are  drawn  are 
not  more  various  than,  nor  indeed  so  various  as,  those  from  which  beef  and  mut¬ 
ton,  butter  and  provisions,  timber,  tallow,  and  leather  are  drawn ;  yet  all  these 
latter  articles  have  very  considerably  advanced  in  price.  Again,  among 
colonial  and  tropical  produce  Mr.  Newmarch  includes  rum  and  tobacco,  and  he 
might  also  have  included  cotton  ;  yet  these  articles,  though  falling  within  the 
class  which  he  says  admits  of  being  expeditiously  enlarged,  and  which,  there¬ 
fore,  according  to  his  theory,  should  not  have  risen  in  price,  have  in  fact  risen  in 
a  very  marked  manner.  It  appears  to  me  that  these  phenomena  can  only  be 
understood  by  reference  to  the  principle  which  I  have  endeavored  to  explain 
further  on  —  namely,  the  efficacy  of  the  currency  of  different  countries  in 
determining  local  prices. 


250 


ECONOMIC  HISTORY. 


fixed  capital  employed ;  and  the  principal  form  in  which  fixed 
capital  exists  is  that  of  machinery.  It  is,  therefore,  in  articles 
in  the  production  of  which  machinery  is  extensively  employed 
—  that  is  to  say,  in  the  more  highly  finished  manufactures  — 
that  the  contraction  of  supply  will  be  most  difficult;  and  this, 
it  will  be  observed,  is  also  the  kind  of  commodities  for  extend¬ 
ing  the  supply  of  which  the  facilities  are  greatest.  While, 
therefore,  manufactured  articles  can  never  be  very  long  in 
advance  of  the  general  movement  of  prices,  they  may,  of  all 
commodities,  be  the  longest  in  arrear  of  it. 

The  operation  of  this  principle  will  be  shown  chiefly  in  that 
class  of  articles  which  feels  the  effect  of  the  new  gold  only 
through  its  indirect  action  —  that  is  to  say,  through  its  action 
upon  wages.  With  respect  to  such  article  there  is  no  exten¬ 
sion  of  demand,  and  the  price  consequently  can  only  be  raised 
through  a  contraction  of  supply.  It  is  evident  that  of  all 
commodities  this  is  the  class  in  which  the  rise  of  price  must 
proceed  most  slowly. 

From  the  foregoing  considerations,  then,  I  arrive  at  the  fol¬ 
lowing  general  conclusions  :  — 

First.  —  That  the  commodities  the  price  of  which  may  be 
expected  first  to  rise  under  the  influence  of  the  new  money  are 
those  which  fall  most  extensively  within  the  consumption  of 
the  productive  classes,  but  more  particularly  within  the  con¬ 
sumption  of  the  laboring  and  artisan  section  of  these. 

Secondly.  —  That  of  such  commodities,  that  portion  which 
consists  of  finished  manufactures,  though  their  price  may  in 
the  first  instance  be  rapidly  raised,  cannot  continue  long  in 
advance  of  the  general  movement,  owing  to  the  facilities 
available  for  rapidly  extending  the  supply ;  whereas,  should 
the  production,  from  over-estimation  of  the  increasing  require¬ 
ments,  be  once  carried  to  excess,  their  prices,  in  consequence 
of  the  difficulty  of  contracting  supply,  may  be  kept  for  some 
considerable  time  below  the  normal  level. 

Thirdly. — That  such  raw  products  as  fall  within  the  con¬ 
sumption  of  the  classes  indicated,  not  being  susceptible  of  the 
same  rapid  extension  as  manufactures,  may  continue  for  some 
time  in  advance  of  the  general  movement,  and  that,  among  raw 


THE  NEW  GOLD. 


251 


ft 

products,  the  effects  will  be  more  marked  in  those  derived  from 
the  animal  than  in  those  derived  from  the  vegetable  kingdom. 

Fourthly.  —  That  the  commodities  last  to  feel  the  effects  of 
the  new  money,  and  which  may  be  expected  to  rise  most 
slowly  under  its  influence,  are  those  articles  of  finished  manu¬ 
facture  which  do  not  happen  to  fall  within  the  range  of  the 
new  expenditure ;  such  articles  being  affected  only  by  its 
indirect  action,  and  this  action  being  in  their  case  obstructed 
by  impediments  to  the  contraction  of  supply. 

This  is  one  class  of  laws  by  which  I  conceive  the  ascending 
movement  in  prices  will  be  governed  ;  and  up  to  this  point  I 
have  the  satisfaction  of  finding  my  conclusions  very  fully 
corroborated  by  the  independent  investigations  of  a  French 
economist,  M.  Levasseur,  who,  in  some  articles  lately  con- 
tributed  by  him  to  the  Journal  des  Economistes ,  has,  by  an 
entirely  different  line  of  investigation  from  that  which  I  have 
followed,  —  namely,  by  generalizing  on  the  statistics  of  prices 
in  France  during  the  period  of  1847  to  1856,  —  arrived  at 
conclusions  in  the  main  points  identical  with  those  which  I 
have  now  advanced.1 

There  is,  however,  another  principle  to  which  I  venture  to 
call  attention,  which  has  not,  so  far  as  I  know,  been  noticed 
by  any  of  the  economists  who  have  treated  this  question,  but 
which,  it  appears  to  me,  must  exercise  a  powerful  influence  on 
the  course  of  the  movement.  The  principle  to  which  I  refer 
is  that  efficacy  which  resides  in  the  currency  of  each  country, 
into  which  any  portion  of  the  new  money  may  be  received, 
for  determining  the  effect  of  this  infusion  on  the  range  of 
local  prices. 

It  is  evident  that  the  quantity  of  metallic  money  necessary 
to  support  any  required  advance  of  prices  throughout  a  given 
range  of  business  will  vary  with  the  character  of  the  currency 
into  which  it  is  received ;  that  the  quantity  required  will  be 
greater  in  proportion  as  the  metallic  element  of  the  currency 
is  greater ;  and,  on  the  other  hand,  less  in  proportion  as  the 
credit  element  prevails.  If  the  currency  of  a  country  be 

1  See  Cairnes,  Appendix,  p.  360,  for  a  summary  of  M.  Levasseur’s  con¬ 
clusions. 


252 


ECONOMIC  HISTORY. 


purely  metallic,  a  given  addition  of  coin  will  increase  the  ag¬ 
gregate  medium  of  exchange  in  that  country  only  by  the  same 
amount ;  if,  on  the  other  hand,  the  currency  consists  largely 
of  credit  contrivances,  each  addition  to  its  coin  becomes  the 
basis  of  a  new  superstructure  of  credit  in  the  form  of  bank- 
notes  and  credits,  bills  of  exchange,  checks,  etc.,  and  the  ag¬ 
gregate  circulation  is  increased,  not  simply  by  the  amount  of 
the  added  coin,  but  by  the  extent  of  the  new  fabric  of  credit 
of  which  this  coin  is  made  the  foundation.  Applying  this 
principle  to  the  different  countries  of  the  world,  it  follows  that 
a  given  addition  to  the  metallic  stock  of  Great  Britain  or  the 
United  States,  in  whose  monetary  systems  credit  is  very  effi¬ 
cacious,  will  cause  a  greater  expansion  of  the  total  circulation, 
and  therefore  will  support  a  greater  advance  in  general  prices, 
than  the  same  addition  to  the  currency  of  countries  like  France, 
in  which  credit  is  less  active ;  and  that,  again,  the  effect  in 
countries  like  France  will  be  greater  than  in  countries  like 
India  or  China,  in  which  the  currencies  are  almost  purely 
metallic,  and  where  credit  is  comparatively  little  used. 

Now,  this  being  so,  if  we  consider  further  that  the  coun¬ 
tries  which  receive  in  the  first  instance  the  largest  share  of 
the  new  money  —  namely,  England  and  the  United  States  — 
are  also  those  in  which,  from  the  character  of  their  curren¬ 
cies,  a  given  amount  of  coin  will  produce  the  greatest  effect ; 
and,  on  the  other  hand,  that  Asiatic  communities,  in  which, 
from  the  weakness  of  the  credit  element,  the  currencies  are 
least  expansible,  receive  but  a  small  portion  of  their  share  of 
the  new  money  direct  from  the  gold  countries ; 1  being  com- 

1  [From  statistics  recently  furnished  by  the  Economist,  I  learn  that  the  facts 
have  not  been  as  I  here  assumed,  at  least  since  1858  (the  date  from  which  full 
returns  of  specie  imports  have  been  published  by  the  Board  of  Trade) ;  and  it  is 
probable  I  was  mistaken  in  my  supposition  with  regard  to  what  had  occurred 
before  that  time.  Since  1858,  of  £90,000,000  of  gold  received  and  retained  by 
India  and  the  East,  some  £40,000,000,  more  than  a  half  of  the  whole,  appear 
to  have  gone  there  directly  from  Australia,  the  remainder  only  having  come 
through  Europe.  This  error  as  to  matter  of  fact  will,  no  doubt,  affect  to  some 
extent  the  conclusion  contended  for.  The  causes  tending  to  a  divergence  of 
European  from  Asiatic  prices  have  not  been,  it  seems,  as  powerful  as  I  had 
supposed;  and,  in  point  of  fact,  this  feature  in  the  movement  has  been  less 
marked  than  I  sketched  it ;  but  for  this,  other  causes  besides  that  noticed  here 
have  been  responsible  (1872).  See  Introductory  Chapter,  p.  12.] 


I 


THE  NEW  GOLD.  253 

I  -  v  (  | 

pelled  to  wait  for  the  remainder  till  it  has  flowed  through  the 
principal  markets  of  Europe  and  America,  affecting  prices  in 
its  transit,  —  if,  I  say,  we  consider  these  facts  in  connection 
with  the  principle  to  which  I  have  adverted,  I  think  we  must 
recognize  in  that  principle  —  in  the  influence  of  the  currency 
of  each  country  on  the  range  of  its  local  prices  —  an  agency 
which  must  modify  in  no  small  degree  the  general  character 
of  the  movement  which  is  now  in  progress. 

In  speaking  of  the  influence  of  the  currency  of  a  country  on 
the  range  of  its  local  prices,  I  should  explain  that  I  use  the 
words  “  local  prices  ”  in  a  somewhat  restricted  sense  ;  namely, 
with  reference  to  the  locality  in  which  commodities  are  pro¬ 
duced ,  not  to  that  in  which  they  are  sold,  their  price  in  the 
latter  place  being  always  determined  by  their  price  in  the 
former.  Thus,  when  I  speak  of  Australian,  English,  or  In¬ 
dian  prices,  I  shall  be  understood  to  mean  the  prices  of  their 
several  products  in  Australia,  England,  or  India. 

Understanding  the  words,  then,  in  this  sense,  let  us  see 
how  far  local  prices  are  likely  to  be  affected  by  the  cause  to 
which  I  have  adverted. 

In  the  first  place,  then,  let  it  be  observed  that  a  very  re¬ 
markable  divergence  of  local  prices  from  the  range  previously 
obtaining  in  the  international  scale  has  already  taken  place.1 
The  prices  of  all  articles  produced  in  Australia  and  California 
are  at  present  on  an  average  from  two  to  three  times  higher 
than  those  wdiich  prevailed  previous  to  the  gold  discoveries ; 
these  rates  have  now  been  maintained  for  several  years,  and 
are  likely  to  continue  ;  but,  while  this  advance  has  taken  place 
in  the  gold  countries,  in  no  part  of  the  world  external  to  those 
regions  have  prices  advanced  by  so  much  as  one  third.  The 
possibility  of  a  divergence  of  local  prices  is  thus,  as  a  matter 
of  fact,  established  ;  and  the  explanation  of  the  phenomenon 
I  take  to  be  this.  The  sudden  cheapening  of  gold  in  Australia 
and  California  quickly  led,  through  the  action  of  competition 
among  the  different  departments  of  industry,  to  a  corre¬ 
sponding  advance  in  the  prices  of  everything  produced  in 
those  countries ;  this  advance  being  in  their  case  possible ,  be- 

1  See  Cairnes,  pp.  24,  25. 


254 


ECONOMIC  HISTORY. 


cause,  from  the  limited  extent  of  the  transactions,  the  local 
circulation  was  quickly  raised  to  the  point  sufficient  to  sustain 
a  double  or  triple  elevation ;  but  it  was  impossible  that  the 
currencies  of  all  countries  should  be  expanded  in  the  same 
proportions  in  the  same  time ;  and,  consequently,  prices  in 
other  countries  have  not  risen  with  the  same  rapidity.  The 
cause,  therefore,  of  this  divergence  of  local  prices  —  the  cir¬ 
cumstance  which  keeps  general  prices  in  arrear  of  that  ele¬ 
vation  which  they  have  attained  in  Australia  and  California  — 
is  the  difficulty  of  expanding  the  currencies  of  the  world  to 
those  dimensions  which  such  an  advance  would  require.  This 
expansion,  however,  is  being  gradually  effected  by  the  process 
we  are  now  witnessing,  —  the  increased  production  of  the  pre¬ 
cious  metals,  and  their  diffusion  throughout  the  world.  But, 
as  I  have  said,  the  diffusion  is  not  uniform  over  the  various 
currencies,  nor  are  the  currencies  receiving  the  new  supplies 
of  uniform  susceptibility;  and  the  inequalities  are  such  as  to 
aggravate  each  other ;  the  currencies  which  are  the  most  sen¬ 
sitive  to  an  increase  of  the  precious  metals  receiving  in  the 
first  instance  nearly  the  whole  of  the  new  gold ;  while  the 
least  sensitive  currencies  are  the  last  to  receive  their  share. 
And  these,  it  appears  to  me,  are  grounds  for  expecting  among 
other  countries  further  examples  of  that  phenomenon  of  local 
divergence,  of  which  one  has  already  been  afforded  by  the  gold 
countries. 

To  judge,  however,  of  the  extent  to  which  such  local  vari¬ 
ations  of  price  can  be  carried,  we  must  advert  to  the  corrective 
influences  which  the  play  of  international  dealings  calls  into 
action ;  and  these  appear  to  me  to  resolve  themselves  into  the 
two  following :  namely,  first,  the  corrective,  which  is  supplied 
by  the  competition  of  different  nations,  producers  of  the  same 
commodities,  in  neutral  markets ;  and  secondly,  that  which 
exists  in  the  reciprocal  demand  of  the  different  commercial 
countries  for  each  other’s  productions. 

The  first  form  of  the  corrective  is  obviously  the  most  pow¬ 
erful,  and  must,  so  far  as  its  operation  extends,  at  once  im¬ 
pose  a  check  upon  any  serious  divergence.  Thus  it  is  evident 
that  prices  in  England  and  the  United  States  could  not  pro- 


THE  NEW  GOLD . 


255 


ceed  very  much  in  advance  of  prices  on  the  continent  of  Europe, 
since  the  certain  effect  of  such  an  occurrence  would  be  to  send 
consumers  from  the  dearer  to  the  cheaper  markets,  and  thus 
to  divert  the  tide  of  gold  from  the  currencies  of  England  and 
America  to  the  currencies  of  France,  Germany,  and  other  con¬ 
tinental  States, —  a  process  which  would  be  continued  until 
prices  were  restored  to  nearly  the  same  relative  level  as  before. 
But  it  is  only  among  nations  which  are  competitors  in  the 
same  description  of  commodities  that  this  equalizing  process 
comes  into  operation.  As  between  countries  like  England  and 
America  on  the  one  hand,  and  India  and  China  on  the  other, 
—  in  which  the  climate,  soil,  and  general  physical  conditions 
differ  widely,  in  which,  consequently,  the  staple  industries  are 
different,  and  whose  productions  do  not,  therefore,  come  into 
competition  in  the  markets  of  the  world,  —  this  corrective  in¬ 
fluence  would  be  felt  slightly  or  not  at  all.  The  only  check 
which  could  be  counted  on  in  this  case  would  be  that  far 
weaker  one  which  is  furnished  by  the  action  of  reciprocal  de¬ 
mand  in  international  dealings.  Thus,  supposing  prices  to 
rise  more  rapidly  in  England  than  in  India,  this  must  lead,  on 
the  one  hand,  to  an  increased  expenditure  in  England  on  In¬ 
dian  commodities,  and,  on  the  other,  to  a  diminished  expendi¬ 
ture  in  India  on  English  commodities,  with  this  result, —  a 
steady  efflux  of  the  precious  metals  from  the  former  to  the 
latter  country.  Such  an  efflux,  as  commercial  men  are  well 
aware,  has  long  been  a  normal  phenomenon  in  our  Eastern 
trade,  but  it  has  lately  assumed  dimensions  which  constitute 
it  a  new  fact  needing  a  special  explanation.  I  believe  that 
explanation  is  to  be  found  in  the  circumstances  to  which  I  am 
calling  attention. 

English  and  American  prices,  and  with  them  money  incomes 
in  England  and  America,  have,  under  the  action  of  the  new 
gold,  been  advancing  more  rapidly  than  prices  and  incomes  in 
Oriental  countries ;  and  the  result  has  been  a  change  in  the 
relative  indebtedness  of  those  two  parts  of  the  world,  leading 
to  a  transfer  to  the  creditor  country  of  corresponding  amounts 
of  that  material  which  forms  the  universal  equivalent  of  com¬ 
merce.  It  is  true,  indeed,  that  other  causes  have  also  contrib- 


256 


ECONOMIC  HISTORY. 


uted  to  this  result,  and  in  particular  I  may  mention  the  failure 
of  the  silk  crop  in  Europe,  which  has  largely  thrown  us  upon 
China,  as  a  means  of  supplementing  our  deficient  supplies. 
But  the  main  cause  of  the  phenomenon  in  its  present  propor¬ 
tions  is,  I  conceive,  to  be  found,  not  in  any  such  mere  tempo¬ 
rary  disturbances,  but  in  the  natural  overflowing  (consequent 
upon  the  increase  of  the  precious  metals)  of  the  redundant 
currencies  of  Europe  and  America  into  the  more  absorbent 
and  impassive  systems  of  Asia.1  This,  then,  I  say,  is  the  only 
substantial  corrective  afforded  to  the  advance  of  prices  in 
Europe  and  America  beyond  their  former  and  normal  level  in 
relation  to  prices  in  the  East ;  and  the  question  is,  will  this 
corrective  be  sufficient  to  neutralize  the  tendency  to  a  diver¬ 
gence  ?  Will  the  flow  of  the  precious  metals  from  West  to 
East  suffice  to  keep  prices  in  England  and  America  within  the 
range  prescribed  by  the  inelastic  metallic  systems  of  Asia  ?  I 
do  not  conceive  that  the  corrective  will  be  adequate  to  this 
end,  and  I  rest  this  conclusion  upon  the  facts  and  principles 
which  I  have  stated,  —  the  vast  proportion  of  the  whole  gold 
production  which  finds  its  way  in  the  first  instance  into  the 
markets  of  England  and  America,  the  comparatively  small 
portion  which  goes  direct  to  the  markets  of  Asia,2  the  highly 
elastic  and  expansible  currencies  of  the  former  countries,  and 
the  extremely  impassive  and  inexpansible  currencies  of  the 
latter. 

We  find,  therefore,  two  sets  of  laws  by  which  the  progress 
of  prices,  or  (which  comes  to  the  same  thing)  the  deprecia- 

1  Accordingly  we  find  that  the  drain  which,  during  the  revulsion  of  trade 
following  on  the  commercial  crisis  of  1857,  had  fora  while  ceased,  has  with 
the  revival  of  trade,  recommenced.  As  a  proof  how  little  mere  practical  sagacity 
is  to  be  trusted  in  a  question  of  this  kind,  it  may  be  worth  while  to  mention  that, 
only  three  months  since,  mercantile  writers  were  confidently  predicting  the  turn¬ 
ing  of  the.  tide  of  silver  from  the  East  to  England.  The  following  is  from  a  circu¬ 
lar  of  Messrs.  Ellisen  &  Co.,  quoted  in  the  Times  City  article,  July  28,  1858, 
apparently  with  the  editor’s  approval :  “  The  time  is  rapidly  approaching  when 
silver  will  also  be  shipped  from  here  [China]  to  England.”  So  far  from  this 
being  the  case,  the  drain  to  the  East  has  again  set  in,  and  gives  every  indica¬ 
tion  of  assuming  its  former  dimensions.  Every  mail  to  India  during  the  pres¬ 
ent  month  (November,  1858)  has  taken  out  large  amounts  of  silver. 

2  See  ante,  p.  252,  note. 


THE  NEW  GOLD. 


25.7 


tion  of  gold  under  the  action  of  an  increased  supply,  is  regu¬ 
lated  :  first,  those  which  I  explained  in  the  earlier  portion  of 
this  paper,  which  depend  chiefly  on  the  facility  with  which 
the  supply  of  commodities  can  be  adjusted  to  such  changes  in 
demand  as  the  new  money  expenditure  may  occasion ;  and, 
secondly,  those  which  result  from  the  action  of  the  new  money 
on  the  currencies  into  which  it  is  received.  According  to  the 
former  principle,  the  rise  in  price  follows  the  nature  of  the 
commodity  affected ;  thus  it  will  in  general  be  greater  in  ani¬ 
mal  than  in  vegetable  productions  —  in  raw  produce  than  in 
finished  manufactures.  According  to  the  latter  principle,  the 
advance  follows  the  economic  conditions  of  the  locality  in 
which  the  commodity  is  produced.  Thus  the  rise  in  price  has 
been  most  rapid  in  commodities  produced  in  the  gold  coun¬ 
tries  ;  having  in  these  at  a  single  bound  reached  its  utmost 
limit,  —  the  limit  set  by  the  cost  of  procuring  gold.  After 
commodities  produced  in  the  gold  regions,  the  advance  I  con¬ 
ceive  will  proceed  most  rapidly  in  the  productions  of  England 
and  the  United  States ;  after  these,  at  no  great  interval,  in 
the  productions  of  the  continent  of  Europe ;  while  the  com¬ 
modities  the  last  to  feel  the  effects  of  the  new  money,  and 
which  will  advance  most  slowly  under  its  influence,  are  the 
productions  of  India  and  China,  and,  I  may  add,  of  tropical 
countries  generally,  so  far  as  these  share,  as  regards  their 
economic  conditions,  the  general  character  of  the  former 
countries. 

Such  appear  to  be  the  general  principles  according  to  which 
a  depreciation  of  the  precious  metals,  under  the  action  of  an 
increased  supply,  tends  to  establish  itself.  With  a  view  to 
ascertain  how  far,  in  the  progress  of  prices  up  to  the  present 
time  (1858),  any  trace  of  their  operation  can  be  discerned,  I 
have  drawn  up  some  statistical  tables ; 1  and  although,  from 
the  imperfect  nature  of  the  materials  which  I  have  been  able 
to  collect,  I  cannot  claim  for  the  result  a  complete  verification 
of  the  theoretic  conclusions  which  I  have  ventured  to  ad¬ 
vance,  I  think  they  are  such  as  to  justify  me  in  placing  some 
confidence  in  the  general  soundness  of  those  views.  Before, 

1  See  Cairnes,  Appendix. 

17 


258 


ECONOMIC  HISTORY. 


however,  stating  the  results  of  the  tables,  two  or  three  re¬ 
marks  must  be  premised. 

First,  I  would  crave  attention  to  this  fact,  that  the  present 
time  [1858]  is  one  singularly  free  from  disturbing  influences, 
and  that  such  as  do  exist  are  of  a  kind  rather  to  conceal  than 
exaggerate  the  effects  of  depreciation.  Thus,  we  have  had 
three  harvests  in  succession  of,  I  believe,  more  than  average 
productiveness  (the  last  year  of  deficiency  being  1855) ;  and 
this  cause  of  abundance  has  been  assisted  by  free-trade,  which 
has  opened  our  ports  to  the  produce  of  all  quarters  of  the 
world.  Again,  although  in  the  period  under  review  we  have 
passed  through  a  European  war,  yet  we  have  now  enjoyed  two 
years  and  a  half  of  peace,  during  which,  I  think,  the  economic 
influences  of  the  war  may  be  taken  to  have  exhausted  them¬ 
selves.  It  is  true,  indeed,  that  we  have  an  Indian  revolt  still 
on  our  hands,  besides  having  but  just  concluded  some  hostile 
operations  in  China.  But  these  disturbances  have  not  been 
of  a  kind  to  interfere  seriously  with  the  general  course  of 
trade,  except  in  some  few  Oriental  commodities  in  which  their 
effects  are  slightly  apparent. 

But  what  renders  the  present  time  peculiarly  important  as 
a  point  of  comparison  with  former  periods,  is  its  being  in  im¬ 
mediate  sequence  to  a  severe  commercial  crisis.  The  effect 
of  the  crisis  of  last  winter  has  been  effectually  to  eliminate 
one  great  disturbing  element  from  those  causes  to  which  a 
rise  of  price  might  be  attributed, —  the  element  of  credit. 
Trade  is  now  suffering  depression  in  almost  all  its  branches ; 
and  prices,  after  a  period  of  undue  inflation,  have,  through  an 
ordeal  of  bankruptcy,  been  brought  to  the  test  of  real  value. 
In  the  fluctuations  of  commerce  we  have  reached  the  lowest 
point  of  the  wave ;  whatever,  therefore,  be  the  range  of  prices 
at  the  present  time,  we  may  at  least  be  sure  that  no  commer¬ 
cial  convulsion  is  likelv  to  lower  it. 

We  have  further  to  remember  that  in  an  age  like  the  pres¬ 
ent,  in  which  science  and  its  applications  to  the  arts  are  in  all 
civilized  countries  making  rapid  strides,  there  exists  in  most 
articles  of  general  consumption  (but  more  particularly  in  the 
more  finished  manufactures)  a  constant  tendency  to  a  decline 


THE  NEW  GOLD. 


259 


of  price,  through  the  employment  of  more  efficient  machinery 
and  improved  processes  of  production.  Now,  taking  all  these 
circumstances  together,  —  the  propitiousness  of  the  seasons, 
the  action  of  free-trade,  the  absence  of  war,  the  contraction  of 
credit,  and  the  general  tendency  to  a  reduction  of  cost  pro¬ 
ceeding  from  the  progress  of  knowledge,  —  it  appears  to  me 
that,  were  there  no  other  cause  in  operation,  we  should  have 
reason  to  look  for  a  very  considerable  fall  of  prices  at  the 
present  time,  as  compared  with,  say,  eight  or  ten  years  ago. 
Prices,  however,  as  the  following  tables 1  will  show,  have  not 
fallen ;  they  have,  on  the  contrary,  very  decidedly  risen,  and 
the  advance  has,  moreover,  as  the  same  tables  will  also  show, 
on  the  whole  proceeded  in  conformity  with  the  principles 
which  I  have  in  this  paper  endeavored  to  establish.  And  this 
is  my  ground  for  asserting  that  the  depreciation  of  our  stan¬ 
dard  money  is  already,  under  the  action  of  the  new  gold,  an 
accomplished  fact.  „  .  * 

ESSAY  III.  — INTERNATIONAL  RESULTS.2 

In  a  former  essay 3  it  was  attempted,  from  a  review  of  the 
industrial  history  of  Australia  since  the  late  discovery  of  gold, 
to  make  some  general  deductions  respecting  the  character 
of  that .  event,  and  of  its  influence  upon  national  interests. 
Among  other  conclusions  it  was  maintained  that  the  tendency 
of  the  gold  discoveries,  or,  to  speak  with  more  precision,  the 
tendency  of  the  increased  production  of  gold,  was  rather  to 
alter  the  distribution  of  real  wealth  in  the  world  than  to 
increase  its  amount ;  the  benefit  derived  by  some  countries 
and  classes  from  the  event  being  for  the  most  part  obtained  at 
the  expense  of  others.  It  was  shown,  for  example,  that  the^ 
gain  to  Australia  and  California  from  their  gold-fields  accrued 
to  them  exclusively  through  their  foreign  trade,  —  their  cheap 
gold  enabling  them  to  command  on  easier  terms  than  for¬ 
merly  all  foreign  productions ;  while,  on  the  other  hand,  the 
only  result  to  foreign  nations  of  the  traffic  thence  arising  was 

1  See  Cairnes,  Appendices.  2  Fraser’s  Magazine,  January,  1860. 

3  Essay  I.  of  this  series. 


260 


ECONOMIC  HISTORY. 


an  increase  in  their  stock  of  money,  —  a  result  rendered  nec¬ 
essary  indeed  by  the  new  conditions  of  raising  gold  introduced 
by  the  gold  discoveries,  but  in  itself  destitute  of  any  real 
utility.  It  was  shown,  in  short,  that,  as  regards  commercial 
nations,  the  effect  of  the  gold  discoveries  was  to  place  them 
under  the  necessity  of  enlarging  their  currencies,  compelling 
them  to  pay  for  the  requisite  increase  by  an  increased  export 
of  their  productions. 

To  this  conclusion  I  was  led  by  direct  inference  from  the 
facts  presented  in  the  gold  countries.  In  the  present  paper  it 
is  proposed  to  follow  up  the  inquiry,  with  a  view  to  a  more 
particular  ascertainment  of  the  consequences  formerly  de¬ 
scribed  ;  the  object  being  to  discover  in  what  manner  the  loss 
arising  from  the  gold  movement  is  likely  to  be  distributed 
among  commercial  nations,  and  how  far  this  loss  may  in  par¬ 
ticular  cases  be  neutralized  or  compensated  by  other  influences 
which  the  same  movement  may  develop. 

In  the  discussions  which  have  hitherto  taken  place  upon 
this  question,  the  inquiry  into  the  consequences  of  the  gold 
discoveries  has  been  confined  almost  exclusively  to  that  as¬ 
pect  of  the  event  in  which  it  is  regarded  as  affecting  fixed 
contracts  through  a  depreciation  of  the  monetary  standard.1 
As  soon  as  the  probability  of  depreciation  is  settled,  and  the 
effects  of  this  upon  the  different  classes  of  society,  according 
as  they  happen  to  be  debtors  or  creditors  under  fixed  con¬ 
tracts,  explained,  the  subject  for  the  most  part  js  considered 
as  exhausted.  I  venture,  however,  to  think  that  this  mode 
of  treatment  is  very  far  from  exhausting  the  question.  It 
seems  to  me  that,  independently  altogether  of  the  existence 
of  fixed  contracts,  independently  even  of  gold  being  a  stand¬ 
ard  of  value,  the  increased  production  of  this  metal  which  is 
now  taking  place  will  be  attended,  indeed  has  already  been 

1  See  Stirling’s  “Gold  Discoveries  and  their  probable  Consequences;” 
Chevalier  “  On  the  Probable  Fall  in  the  Value  of  Gold ;  ”  Levasseur’s  contribu- 
tions  to  the  “Journal  des  Economistes,”  1858;  M’Culloch’s  article  “ Precious 
Metals,”  in  the  “  Encyclopaedia  Britannica.”  In  all  these,  and  in  many  other 
minor  productions  on  the  same  subject,  almost  the  only  consequences  of  the 
gold  discoveries  which  are  taken  account  of  are  those  which  occur  in  fixed 
contracts  through  a  depreciation  of  the  standard. 


THE  NEW  GOLD . 


261 


attended,  with  very  important  results.  Let  us  observe  for 
a  moment  the  movement  which  is  now  in  progress.  Austra¬ 
lia  and  California  have,  during  the  last  eight  or  ten  years, 
sent  into  general  circulation  some  two  hundred  millions 
sterling  of  gold.  Of  this  vast  sum  portions  have  penetrated 
to  the  most  remote  quarters  of  the  world;  but  the  bulk  of 
it  has  been  received  into  the  currencies  of  Europe  and  the 
United  States  from  which  it  has  largely  displaced  the  silver 
formerly  circulating;  the  latter  metal,  as  it  has  become  free, 
flowing  off  into  Asia,  where  it  is  permanently  absorbed. 
Viewing  the  effect  as  it  occurs  in  the  mass  of  the  two  metals 
combined,  it  may  be  said  that  the  stream  which  rises  in  the 
gold  regions  of  Australia  and  California  flows  through  the 
currencies  of  the  United  States  and  Europe,  and  after  saturat¬ 
ing  the  trade  of  these  countries,  finally  loses  itself  in  the 
hoards  of  China  and  Hindostan.  The  tide  which  comes  to 
light  in  the  sands  and  rocks  of  the  auriferous  regions  disap¬ 
pears  in  the  accumulations  of  the  East.  In  conjunction, 
however,  with  this  movement,  there  has  been  a  counter  one. 
With  every  advance  in  the  metallic  tide  a  stream  of  com¬ 
modities  has  set  in  in  the  opposite  direction  along  the  same 
course,  —  a  stream  which,  issuing  from  the  ports  of  Europe, 
America,  and  Asia,  and  depositing  as  it  proceeds  a  portion 
of  the  wealth  with  which  it  is  charged,  finds  its  termination 
in  the  markets  of  the  gold  countries.  Here,  then,  we  find  a 
vast  disturbance  in  the  conditions  of  national  wealth,  —  a 
disturbance  originating  in  the  gold  discoveries,  and  result¬ 
ing  in  a  transfer,  on  an  enormous  scale  of  consumable  goods 
—  the  means  of  well-being  —  from  one  side  of  the  globe  to  the 
other.  This  disturbance,  it  is  evident,  is  entirely  independ¬ 
ent  of  the  accident  that  gold  happens  to  be  in  some  countries 
a  standard  of  value,  as  well  as  of  the  existence  of  fixed  money- 
contracts;  for  it  includes  within  the  range  of  its  influence 
countries  in  which  gold  is  not,  no  less  than  those  in  which 
it  is,  the  monetary  standard;  and  it  affects  alike  persons 
whose  bargains  are  made  from  day  to  day,  and  those  who 
engage  in  contracts  extending  over  centuries.  The  fact  is, 
the  movement  in  question  is  the  result,  not  of  gold’s  being  a 


262 


ECONOMIC  HISTORY. 


standard  of  value,  but  of  its  being  a  source  of  purchasing 
power;  and  the  influence  of  the  gold  discoveries  having  been 
hitherto  regarded  almost  exclusively  with  reference  to  the 
former  function,  the  vast  effects  which  they  are  producing 
through  the  action  of  the  latter,  —  that  is  to  say,  by  altering 
the  distribution  of  purchasing  power  in  the  world,  —  have 
been  almost  wholly  overlooked.  It  has  indeed  been  per¬ 
ceived  that  a  great  influx  of  the  precious  metals  is  taking 
place,  accompanied  with  certain  consequences  on  the  trade 
of  the  world;  but  so  far  as  I  know,  beyond  some  general 
phrases  respecting  the  stimulus  given  to  production  by  an 
increase  of  money,  and  the  great  development  of  commerce 
which  it  is  causing,  no  attempt  has  yet  been  made  to  state 
the  principles  by  which  the  movement  is  governed,  or  the 
effects  which  may  flow  from  it.  It  is  to  these  questions, 
then,  that  I  would  now  solicit  the  reader’s  attention,  and 
towards  their  solution  the  following  remarks  are  offered 
'as  a  contribution. 

Those  who  have  followed  the  course  of  this  controversy  are 
aware  that,  by  most  persons  who  have  taken  part  in  it,  it  has 
been  assumed,  almost  as  an  axiom,  that  no  depreciation  of 
gold  in  consequence  of  the  gold  discoveries  has,  up  to  the 
present  time,  taken  place.1  As  a  matter  of  fact,  however, 
we  know  that  the  gold  prices  of  all  commodities  produced  in 
Australia  and  California  have  risen  in  at  least  a  twofold  pro¬ 
portion;2  while  we  have  seen  that  (so  long  as  the  conditions 
of  producing  gold  remain  as  at  present)  this  rise  must  be  per¬ 
manent.  To  express  the  same  thing  differently :  in  the  pur¬ 
chase  of  every  commodity  raised  in  the  gold  countries  two 
sovereigns  are  now  required,  and  (the  above  conditions  being 
fulfilled)  will  continue  to  be  required,  where  one  was  formerly 

1  The  principal  exceptions  to  this  statement  are  M.  Levasseur  (who,  in  an  ar- 

* 

tide  in  the  “Journal  ties  Economistes,”  March,  1858,  estimates  the  rise  of  prices 
in  France  since  1847  at  20  per  cent  on  all  commodities),  and  Dr.  Soetbeer,  of 
Hamburg,  who,  in  his  table  of  prices  given  in  his  “  Contributions  to  the  Statis¬ 
tics  of  Prices  in  Hamburg,”  arrives  at  a  similar  result  (see  Appendix).  Many 
other  writers,  indeed,  acknowledge  that  prices  have  risen,  but  the  rise  is  always 
attributed  to  causes  distinct  from  the  increased  production  of  gold. 

2  See  Cairnes,  p.  24. 


THE  NEW  GOLD. 


263 


sufficient ;  and  if  this  does  not  amount  to  a  fall  in  the  value 
of  gold,  I  must  confess  myself  unable  to  understand  the  mean¬ 
ing  of  that  expression.  It  is  not  to  be  supposed  that  so  re¬ 
markable  a  fact  as  this  should  have  escaped  the  attention  of 
those  who  have  written  on  this  question;  it  seems  to  me 
rather  that  the  ignoring  of  it  in  the  discussion  is  to  be 
attributed  to  a  want  of  definite  ideas  respecting  value  in  the 
precious  metals,  as  well  as  respecting  the  mode  in  which 
changes  in  their  value  are  accomplished.  The  language 
which  is  commonly  used  on  the  subject  would  seem  to  imply 
that  gold  and  silver  possess  throughout  the  world  a  uniform 
value,  and  that  all  changes  therein  proceed  in  a  uniform 
manner,  showing  themselves  at  the  same  time  in  all  coun¬ 
tries,  and  in  respect  to  all  commodities.  But  nothing  can 
be  further  from  the  truth  than  such  a  notion.  Gold  and 
silver,  like  all  other  things  which  are  the  subjects  of  inter¬ 
national  exchange,  possess  local  values;1  and  it  is  by  a 
succession  of  operations  on  the  local  values  of  gold  of  an 
unequal  and  fluctuating  character  that  its  depreciation  is 
being  effected,  and  that  (the  conditions  of  production  re¬ 
maining  as  at  present)  its  value  will  continue  to  decline. 
The  twofold  rise  of  prices  in  the  gold  countries  forms  the 
first  step  in  this  progress ;  and  it  will  be  through  a  series  of 
similar  partial  advances  in  other  countries,  and  not  by  any 
general  movement,  that  the  depreciation  of  the  metal 
throughout  the  world  will  be  accomplished,  if  that  consum¬ 
mation  is  indeed  to  take  place.  With  the  question  of  de¬ 
preciation,  however,  I  am  at  present  no  further  concerned 
than  may  be  necessary  to  show  the  bearing  of  these  changes 
in  the  local  values  of  gold  upon  the  movements  of  trade,  and 
through  these  upon  national  interests. 

There  is  no  need  here  to  resort  to  argument  to  prove  that 
a  general  rise  or  a  general  fall  of  prices,  provided  it  be 
simultaneous  and  uniform,  can  be  attended,  always  exclud¬ 
ing  the  case  of  fixed  incomes  and  contracts  already  entered 

1  See  on  the  subject  of  the  local  values  of  the  precious  metals,  Ricardo’s 
“  Works,”  pp.  77-86,  and  Mill’s  “Principles  of  Political  Economy,”  Book  iii., 
chaps,  xix.  and  xxi. 


264 


ECONOMIC  HISTORY. 


into,  with  no  important  consequences  either  to  nations  or  to 
individuals.  It  is  evident  that  such  a  change  would  merely 
alter  the  terms  in  which  transactions  are  carried  on,  not  the 
transactions  themselves.  But  when  the  rise  or  fall  of  prices 
is  not  general,  in  other  words,  when  the  change  in  the  values 
of  the  precious  metals  is  merely  local,  it  will  he  seen  that 
important  consequences  must  result.  Supposing,  for  exam¬ 
ple,  the  prices  of  all  commodities  produced  in  England  to  be 
doubled,  while  prices  throughout  the  rest  of  the  world  re¬ 
mained  unchanged,  it  is  evident  that  half  the  commodities 
exported  from  England  would,  under  these  circumstances, 
be  sufficient  to  discharge  our  foreign  debts.  With  half  the 
capital  and  labor  now  employed  in  producing  goods  for  the 
foreign  markets,  we  should  attain  the  same  result  as  at  pres¬ 
ent, —  the  procuring  of  our  imports;  while  the  remaining 
half  would  be  set  free  to  be  applied  to  other  purposes,  — to 
the  further  augmentation  of  our  wealth  and  well-being. 
England  would,  therefore,  in  the  case  we  have  supposed,  be 
benefited  in  all  her  foreign  dealings  to  the  full  extent  of  the 
rise  in  price.  On  the  other  hand,  foreign  countries  would, 
in  exchange  for  the  commodities  which  they  send  us,  receive 
in  return  of  our  commodities  but  half  their  present  supply. 
Their  labor  and  capital  would  go  but  half  as  far  as  at  pres¬ 
ent  in  commanding  our  productions,  and  they  would  be 
losers  in  proportion.  It  is  evident,  therefore,  that  while 
nations  have  not,  any  more  than  individuals,  any  interest  in 
the  positive  height  which  prices  may  attain,  every  nation,  as 
well  as  every  individual  trader,  is  interested  in  raising,  in 
relation  to  others ,  the  price  of  its  own  productions.  The 
lower  the  local  value,  therefore,  of  the  precious  metals  in 
any  country,  the  greater  will  be  the  advantage  to  that  coun¬ 
try  in  foreign  markets. 

This  being  the  manner  in  which  nations  are  interested  in 
changes  in  the  value  of  gold,  let  us  now  observe  the  effect 
which  the  gold  discoveries  are  producing  in  this  respect. 
As  has  been  already  stated,  the  local  value  of  gold  in  Aus¬ 
tralia  and  California  has  fallen  to  one-half,  the  prices  of 


THE  NEW  GOLD. 


2  65 


their  productions  having  risen  in  a  twofold  proportion;1  and 
prices  in  other  parts  of  the  world  having  undergone  no  cor¬ 
responding  change,  these  countries  realize  the  position  which 
we  have  just  been  considering  in  our  hypothetical  case.  A 
given  quantity  of  their  capital  and  labor  goes  twice  as  far  as 
formerly  in  commanding  foreign  productions,  while  a  given 
quantity  of  foreign  labor  and  capital  goes  only  one-half  as 
far  in  commanding  theirs.  The  world  has  thus,  through  the 
gold  discoveries,  been  placed  in  its  dealings  with  California 
and  Australia  at  a  commercial  disadvantage ;  and  from  this 
disadvantage  it  can  only  escape  (always  supposing  the  pres¬ 
ent  conditions  of  producing  gold  to 'continue)  by  raising  the 
prices  of  its  productions  in  a  corresponding  degree.  Every 
country,  therefore,  is  interested  in  raising  as  rapidly  as  pos¬ 
sible  the  prices  of  its  productions,  —  in  other  words,  in  the 
most  rapid  possible  depreciation  in  the  local  value  of  its 
gold.2  The  sooner  this  is  effected,  the  sooner  will  the  coun¬ 
try  be  restored  to  its  natural  commercial  footing  in  relation 
to  Australia  and  California;  while  in  relation  to  countries 
where  prices  do  not  rise  with  the  same  rapidity,  it  will  pos¬ 
sess  the  same  kind  of  advantage  which  is  now  enjoyed  by 
the  gold  countries. 

This  conclusion,  I  find,  is  directly  at  variance  with  the 
opinion  of  some  economists  of  eminence.  Mr.  M’Culloch, 
for  example,  in  his  recent  contribution  to  the  “  Encyclopaedia 
Britannica,”  3  maintains  “that  the  mischievous  influence 
resulting  from  a  fall  in  the  value  of  the  precious  metals  de¬ 
pends  in  a  great  measure  on  the  rapidity  with  which  it  is 
brought  about.”  But  I  apprehend  the  difference  between 

1  This  statement  is  not  given  as  strictly  accurate.  On  the  whole,  the  ad¬ 
vance  of  local  prices  in  the  gold  countries  is  at  present  (1859)  considerably 
more  than  this,  —  some  leading  articles,  as  house-rent,  meat,  etc.,  having  risen  in 
a  fourfold  proportion  and  upwards.  I  adopt  the  proportion  of  two  to  one,  be¬ 
cause  money  wages  have  risen  in  about  this  ratio,  and  money  wages,  under  a 
depreciation  of  the  precious  metals,  ultimately  govern  money  prices. 

2  For  the  general  ground  of  this  assertion  the  reader  is  referred  to  Mr.  Mill’s 
chapters  on  International  Values,  and  on  Money  as  an  Imported  Commodity, 
in  his  “Principles  of  Political  Economy also  to  Mr.  Senior’s  essay  “On  the 
Cost  of  Obtaining  Money.” 

8  Article  “  Precious  Metals.” 


266 


ECONOMIC  HISTORY. 


Mr.  M’Culloch  and  myself  arises  from  liis  attending  exclu¬ 
sively  to  a  single  class  of  consequences,  —  those,  namely, 
which  result  in  the  case  of  fixed  contracts,  from  a  deprecia¬ 
tion  of  the  standard.  With  respect  to  this  class  of  effects, 
it  is  quite  true  that  the  evils  which  they  involve  will  be 
increased  by  the  rapidity  of  the  depreciation;  but  as  I  have 
shown,  the  new  gold  is  producing  effects  quite  independently 
of  its  operation  upon  fixed  contracts ;  and  it  is  to  those  other 
effects  that  the  statement  I  have  just  made  is  intended  to 
apply.  The  distinction  which  I  have  in  view  will  be  best 
exemplified  by  recurring  to  the  experience  of  the  gold  coun¬ 
tries.  In  these  the  value  of  gold  fell  by  more  than  50  per 
cent  in  a  single  year,  the  depreciation  involving  a  propor¬ 
tional  loss  to  creditors  with  a  corresponding  gain  to  debtors 
and  entailing  in  addition  those  numerous  incidental  evils 
which  always  result  from  a  sudden  disturbance  of  social 
relations.  No  one,  however,  on  this  account,  will  say  that 
the  sudden  depreciation  of  gold  in  Australia  and  California 
was  not  for  these  countries  a  great  gain.  The  nature  and 
extent  of  that  gain  I  endeavored  on  a  former  occasion  to 
estimate.1  It  consisted,  as  I  showed,  in  the  increased  com¬ 
mand  conferred  by  the  cheapness  of  their  gold  over  mar¬ 
kets  in  which  gold  prices  had  not  proportionally  risen. 
With  every  rise  in  the  price  of  Australian  and  Californian 
products,  or,  what  comes  to  the  same  thing,  with  every  fall 
in  the  local  value  of  their  gold,  their  power  of  purchase  in 
foreign  markets  increased, —  an  increase  of  purchasing  power 
which,  as  we  know,  was  immediately  followed  by  a  sudden 
and  extraordinary  influx  of  foreign  goods.  Now,  precisely 
the  same  principle  applies  in  the  case  of  other  countries.  A 
fall  in  the  value  of  gold  will,  where  gold  is  the  standard, 
lead  to  a  disturbance  in  fixed  contracts,  with  the  concomi¬ 
tant  evils ;  but  it  will  at  the  same  time,  as  in  the  case  just 
considered,  place  the  countries  in  which  it  occurs  in  a  better 
position  commercially  in  the  markets  of  the  world.  Suppos¬ 
ing,  for  example,  a  rise  in  prices  to  take  place  in  all  com¬ 
mercial  countries  equivalent  to  that  which  has  occurred  in 

1  See  Cairnes,  p.  39. 


THE  NEW  GOLD. 


267 


California  and  Australia,  the  consequence  would  be  what  I 
endeavored  to  explain  in  the  paper  just  referred  to;  the 
export  of  gold  from  California  and  Australia,  at  least  on  its 
present  scale,  would  at  once  cease,  and  the  world  would  re¬ 
ceive  instead  an  increased  supply  of  agricultural  and  pastoral 
products,  and  of  other  commodities  which  those  countries 
are  fitted  to  produce,  — a  result  which,  I  ventured  to  think, 
would  be  a  gain  for  the  world.  On  the  other  hand,  suppos¬ 
ing  the  rise  in  price  to  be  confined  to  a  single  country, —  say 
to  England,  —  then  England  would  at  once  be  placed  on  a 
footing  of  commercial  equality  with  California  and  Austra¬ 
lia,  while  as  regards  other  countries  she  would  occupy  the 
same  vantage-ground  which  California  and  Australia  now 
possess.  She  would,  in  short,  obtain  her  gold  at  half  its 
present  cost  (for  she  would  receive  twice  as  much  as  at  pres¬ 
ent  in  return  for  the  same  expenditure  of  labor  and  capital), 
while  the  gold  thus  obtained  would  be  expended  on  foreign 
commodities,  of  which,  according  to  the  hypothesis,  the 
prices  had  not  risen.  Notwithstanding,  therefore,  the  evils 
which  undoubtedly  attend  variations  in  the  standard  of 
value,  more  especially  in  an  old  and  highly  artificial  com¬ 
munity  like  ours,  it  is  nevertheless,  I  maintain,  for  the  in¬ 
terest  of  every  country,  that,  a  fall  in  the  cost  of  gold  having 
been  effected,  the  progress  of  depreciation  should  in  it  be  as 
rapid  as  possible.  Until  by  a  depreciation  of  gold  corres¬ 
ponding  to  that  which  has  occurred  in  California  and  Aus¬ 
tralia,  the  value  of  that  metal  is  brought  into  harmony  with 
its  cost,  we  must  continue  to  receive  from  those  countries 
little  more  than  a  barren  addition  to  our  stock  of  money. 
But  with  each  successive  step  in  the  progress  of  deprecia¬ 
tion,  there  will  be  for  the  nation  in  which  it  occurs,  a  nearer 
approach  to  the  footing  of  commercial  equality  with  the  gold 
countries  from  which  it  has  been  temporarily  displaced, 
while  in  its  dealings  with  other  places  where  the  decline 
has  been  less  rapid,  the  nation  so  circumstanced  will,  during 
the  period  of  transition,  enjoy  a  commercial  superiority. 
As  a  general  conclusion,  therefore,  we  may  say  that  in 
proportion  as  in  any  country  the  local  depreciation  of  gold 


263 


ECONOMIC  HISTORY. 


is  more  or  less  rapid  than  the  average  rate  elsewhere,  the 
effect  of  the  monetary  disturbance  will  be  for  that  country 
beneficial  or  injurious. 

This  conclusion,  I  may  in  passing  remark,  throws  light 
upon  a  practical  question  of  some  interest  at  the  present 
time,  —  I  mean  the  question  of  introducing  a  gold  currency 
into  India.  The  measure  has  been  advocated  by  Mr. 
M’Culloch,  on  the  ground  that,  by  providing  a  new  market 
for  the  increased  supplies  of  gold,  its  effect  would  be  “to 
counteract  that  fall  in  its  value  which  is  so  generally  appre¬ 
hended.”  1  There  can  be  no  doubt  that  the  effect  of  the 
measure  would  be  what  Mr.  M’Culloch  describes;  but,  if 
the  above  reasoning  be  sound,  this  circumstance,  instead  of 
being  a  reason  for  introducing  gold  into  the  currency  of  In¬ 
dia,  affords  (so  far  as  the  interests  of  India  are  concerned)  a 
strong  reason  against  the  adoption  of  this  course.  Mr. 
M’Culloch  does  not  state  whether  the  effect  which  he  antici¬ 
pates  upon  the  value  of  gold  would  be  general  or  local ; 
whether  extending  over  the  whole  commercial  world  or  con¬ 
fined  to  the  markets  of  India,  — a  point  of  vital  importance 
in  determining  the  character  of  the  result.  If  the  effect  were 
general,  —  if  while  counteracting  depreciation  in  India,  it 
influenced  the  value  of  gold  'proportionately  in  other  parts 
of  the  world,  —  then  it  must  be  conceded  that  the  result 
would  be  entirely  beneficial.  The  evils  incident  to  a  dis¬ 
turbance  of  fixed  contracts  would  be  avoided,  and  no  others 
would  be  incurred.  But  this  is  just  the  point  which  I  ven¬ 
ture  to  deny.  The  adoption  of  gold  as  the  monetary  stand¬ 
ard  of  India  would  certainly  not  affect  the  local  value  of 
gold  in  Australia  and  California;  for,  as  1  proved  on  a  for¬ 
mer  occasion,  the  value  of  gold  in  these  countries  is  deter¬ 
mined  by  its  cost,  and  its  cost  depends  on  the  productiveness 
of  the  gold-fields.  Nor,  for  reasons  which  will  be  hereafter 
stated,  would  it  influence  more  than  in  a  slight  degree  the 
range  of  gold  prices  in  England  and  the  United  States. 
The  operation,  therefore,  of  the  measure  would  be  to  depress 

1  “  Encyclopaedia  Britannica,”  article  “  Precious  Metals/’  p.  473. 


t 


THE  NEW  GOLD. 


269 


gold  prices  in  India,  or  at  least  to  prevent  them  from  rising 
in  that  quarter  as  rapidly  as  they  otherwise  would ;  while  in 
California  and  Australia,  in  England  and  the  United  States, 
it  left  their  course  substantially  unaffected.  Now  this  re¬ 
sult  would  tend  undoubtedly  to  the  advantage  of  California 
and  Australia,  of  England  and  the  United  States,  but,  as 
it  seems  to  me,  would  as  clearly  be  injurious  to  India.  The 
purchasing  power  of  the  former  countries  over  the  markets 
of  India  would,  through  the  relative  superiority  of  their 
prices,  be  increased,  but  the  purchasing  power  of  India  over 
their  markets  would,  for  the  opposite  reason,  be  diminished. 
An  English  or  American  merchant,  instead  of  discharging 
his  debts,  as  at  present,  through  the  medium  of  silver  which 
he  has  to  purchase  with  gold  at  62d.  per  ounce  (and  may 
soon  have  to  purchase  at  a  higher  rate),  might  discharge  the 
same  debts  with  gold  directly ;  and  gold  being  by  hypothesis 
more  valuable  in  India  than  before,  the  same  amount  would 
of  course  go  farther.  But  an  Indian  purchaser  of  English  or 
American  commodities  would  have  the  same  sum  in  gold  to 
pay  as  if  no  change  had  taken  place  in  the  currency  of  In¬ 
dia;  while  the  gold  prices  of  his  native  productions  being 
lower,  his  ability  to  pay  would  of  course  be  less.  It  seems 
to  me,  therefore  (and  the  considerations  here  adduced  are 
entirely  independent  of  the  reasons  which  exist  on  the  score 
of  good  faith,  —  the  Indian  debt  having  been  contracted  in  a 
silver  currency),  that,  viewing  the  matter  from  the  side  of 
Indian  interests,  the  introduction  of  a  gold  currency  into 
India  must  be  regarded  as  a  measure  decidedly  detrimental. 1 

1  Referring  to  the  adoption  of  a  silver  standard  by  Holland  in  1851,  Mr. 
M’Culloch  characterizes  it  as  a  measure  “  in  opposition  to  all  sound  principles.” 
I  confess  I  am  at  a  loss  to  conjecture  what  sound  principle  was  violated  in  pre¬ 
ferring  as  the  standard  of  value  that  metal  the  value  of  which  there  was  every 
reason  to  believe  would  be  the  steadier  of  the  two.  [I  may  say  now  (1872) 
that  I  am  disposed  to  assign  much  less  importance  to  this  question  of  a  change 
in  the  monetary  standard  of  India  than  I  did  when  the  above  passage  was 
written.  The  reasoning  assumes  the  possibility  of  a  serious  divergence  in  the 
relative  values  of  gold  and  silver;  but  I  now  believe  that  such  a  divergence  is 
practically  out  of  the  question,  the  grounds  for  which  opinion  will  be  found 
farther  on  [ Cairnes ,  p.  141].  This  circumstance,  however,  does  not  affect  the  theo¬ 
retic  point  argued  with  Mr.  M’Culloch.  Jf  the  exchange  of  the  existing  silver 


/ 


270  E  CONOMIC  HIS  TOR  Y. 

Returning  once  more  to  the  general  question  we  may  con¬ 
sider  the  following  conclusions  as  established :  1st,  that  the 
effect  of  the  cheapening  of  gold  upon  commercial  countries 
being  to  compel  them  to  enlarge  their  metallic  currencies, 
for  which  enlargement  they  must  pay  by  an  export  of  their 
productions,  each  country  will  endure  a  loss  upon  this  head 
to  the  extent  of  the  additional  sum  which  may  be  requisite 
for  each;  and  2dly,  that  while  there  will  be  a  general  loss 
from  this  cause,  yet  the  progress  of  depreciation  over  the 
world  not  being  uniform  or  simultaneous,  the  primary  loss 
may,  through  the  disturbance  in  international  values  thence 
arising  in  particular  cases,  be  compensated  or  even  con- 
/  verted  into  a  positive  gain ;  the  loss  or  gain  upon  the  dis¬ 
turbance  being  determined  according  as  the  rise  of  prices  in 
any  country  is  in  advance  or  in  arrear  of  the  general  average. 
To  ascertain,  therefore,  the  effect  of  the  movement  upon  any 
particular  nation,  we  must  consider  the  manner  in  which, 
in  its  case,  these  two  principles  will  operate. 

With  respect  to  the  first,  I  am  aware  that,  in  speaking  of 
the  loss  imposed  on  a  country  by  the  necessity  of  enlarging 
its  currency, — by  the  necessity  of  receiving  and  keeping 
increased  supplies  of  gold  and  silver, —  I  am  using  language 
which,  notwithstanding  what  was  said  on  a  former  occasion 
in  its  justification,  and  notwithstanding  that  it  is  merely  in 
strict  conformity  with  the  most  elementary  principles  of 
economic  science,  will  still  appear  . paradoxical  to  many.  I 
would,  therefore,  before  proceeding  farther  with  this  branch 
of  the  argument,  ask  the  reader  to  consider  the  case  of  a 
private  merchant  who  is  compelled  to  increase  the  stock  of 
cash  with  which  he  carries  on  his  business.  The  metallic 
circulation  of  a  country  performs  in  relation  to  the  com¬ 
munity  functions  precisely  analogous  to  those  which  are  dis- 

for  a  gold  standard  in  India  were  calculated  to  produce  the  effects  Mr.  M’Cul- 
loch  expected  from  it,  the  measure,  it  still  seems  to  me,  would  be  open  to  the 
objections  I  have  urged  against  it.  But  I  do  not  believe  that  the  effects  in 
question  would  result ;  and  I  can  well  conceive  that,  having  regard  to  the 
general  convenience  of  commerce,  the  change  might,  on  the  whole,  be 
advantageous.] 


THE  NEW  GOLD. 


271 


charged  for  a  merchant  by  his  cash  reserve.  If  a  merchant 
can  safely  dispense  with  a  portion  of  his  ready  cash,  he  is 
enabled,  with  the  money  thus  liberated,  either  to  add  to  his 
productive  capital  or  to  increase  his  private  expenditure. 
On  the  other  hand,  if  he  finds  it  necessary  to  increase  his 
reserve  of  cash,,  his  productive  capital  must  be  proportionally 
encroached  upon,  or  his  private  expenditure  proportionally 
curtailed.  And  precisely  the  same  may  be  said  of  the  cur¬ 
rency  of  a  nation.  Where  a  country  does  not  itself  yield 
gold  or  silver,1  every  increase  of  its  metallic  circulation 
must  be  obtained  —  can  only  be  obtained  —  by  parting  with 
certain  elements  of  real  wealth,  —  elements  which,  but  for 
this  necessity,  might  be  made  conducive  to  its  well-being. 
It  is  in  enabling  a  nation  to  reduce  within  the  narrowest 
limits  this  unproductive  portion  of  its  stock  that  the  chief 
advantage  of  a  good  banking  system  consists;  and  if  the 
augmentation  of  the  metallic  currency  of  a  country  be  not 
an  evil,  then  it  is  difficult  to  see  in  what  way  the  institution 
of  banks  is  a  good.  In  regarding,  therefore,  the  necessity 
imposed  upon  commercial  countries  of  enlarging  their  metal¬ 
lic  currencies  as  injurious  to  their  interests,  I  make  no  as¬ 
sumption  which  is  not  in  perfect  keeping  with  the  best 
known  and  most  generally  recognized  facts  of  commercial 
experience. 

An  increase  in  the  metallic  currency  of  a  country,  then, 
being  an  evil,  let  us  consider  what  the  circumstances  are  by 
which  the  augmentation  rendered  necessary  by  the  gold 
discoveries  will  be  determined.  This,  it  is  evident,  will 
principally  depend  —  the  amount  of  business  to  be  carried  on 

A 

being  given  —  on  the  extent  to  which  substitutes  for  metal¬ 
lic  money  are  in  use;  in  other  words,  on  the  degree  of 
perfection  which  the  banking  system  of  each  country  has 
attained.  To  illustrate  this,  let  us  suppose  a  given  sum  of 
metallic  money,  say  a  million  sterling,  to  be  introduced 

1  Even  where  it  does  yield  these  metals,  the  necessity  of  augmenting  the 
currency  is  not  the  less  an  evil,  since  the  operation  will  occupy,  with  no  result 
but  that  of  avoiding  an  inconvenience,  a  portion  of  the  labor  and  capital  of 
the  country,  which,  but  for  this,  might  have  contributed  to  its  positive  welfare. 


272 


ECONOMIC  HISTORY. 


into  two  countries  in  which  the  currencies  are  differently 
constituted, — for  example,  into  England  and  India.  In 
India  coin  is  the  principal  medium  of  circulation 1  —  in 
many  parts  the  only  one,  and  consequently  a  million  sterling 
introduced  into  the  currency  of  India  would  represent  only 
an  equal,  or  little  more  than  an  equal,  addition  to  its  total 
medium  of  circulation, — to  the  whole  monetary  machinery 
by  which  the  exchange  of  commodities  is  effected  and  prices 
maintained.  But  in  England,  where  the  currency  is  differ¬ 
ently  constituted,  the  result  would  be  different.  The  great 
bulk  of  the  circulating  medium  of  this  country  consists  of 

1  [The  reader  will  bear  in  mind  that  this  was  written  in  1859.  The  state  of 
the  Indian  currency  at  that  time  may  be  gathered  from  the  following  extracts 
from  a  paper  on  “  The  Trade  and  Commerce  of  India,”  read  before  the  British 
Association  in  1859.]  “  Intimately  connected  with  Indian  trade  and  commerce 

is  a  sound  system  of  banking.  At  present  there  are  only  three  banks  of  impor¬ 
tance  in  India,  —  the  banks  of  Bengal,  Bombay,  and  Madras.  These  have  no 
branches,  the  absence  of  which  constitutes  one  of  the  main  defects  of  the  sys¬ 
tem.  The  few  other  banks  in  India  do  not  issue  notes,  and  employ  their  capi¬ 
tal  in  making  advances  on  bills  of  lading,  in  exchange  operations,  and  in  some 
instances  in  loans  to  members  of  the  Service,  at  high  rates  of  interest;  but 
afford  no  banking  facilities  for  conducting  the  internal  trade  of  the  country.” 
The  writer  then  refers  to  a  table,  showing  the  state  of  the  three  leading  banks 
(Bengal,  Bombay,  and  Madras)  in  the  preceding  June,  from  which  it  appears 
that  the  bullion  at  that  time  in  the  coffers  of  the  banks  was  in  excess  of  the 
notes  in  circulation,  the  amount  of  these  latter  being,  for  the  whole  of  India, 
£2,241,471,  or  about  one-tenth  of  the  amount  issued  by  the  Bank  of  England 
alone;  while  the  total  amount  of  “accounts  current”  was  only  £1,855,000, — 
about  one-sixth  of  those  held  by  some  of  the  private  banks  of  London,  and  not 
one-fifteenth  of  those  of  the  Bank  of  England.  The  total  amount  of  commer¬ 
cial  bills  discounted  in  these  three  leading  banks  of  India  is  set  down  at  £278,- 
906!  “  And  this,”  it  is  observed,  “  in  a  country  where  the  gross  annual  revenue 
is  £34,000,000;  the  export  trade,  on  an  average  of  the  last  five  years,  £24,000- 
000;  the  import  trade,  on  the  same  average,  £23,000,000,  with  an  internal  trade 
to  an  extent  almost  impossible  to  estimate.”  (“The  Trade  and  Commerce  of 
India,”  by  J.  T.  Mackenzie,  read  before  the  British  Association,  1859,  pp.  15, 
16.)  In  the  evidence  taken  before  the  late  Committee  “  On  Colonization  and 
Settlement  in  India,”  Mr.  Alexander  Forbes,  when  questioned  with  reference  to 
the  large  absorption  of  silver  in  India,  expressed  his  opinion  that  the  silver  was 
all  required  for  current  coin.  “  It  has  often  been  said  that  the  natives  hoard 
silver.  Now  my  experience  is  that  they  do  not  hoard  silver;  they  hoard  gold; 
and  that  the  silver  is  actually  required  for  the  commerce  of  the  country.”  And 
this  he  traces  (Answers  2,222,  2,223,  2,372-80)  to  the  want  of  banking  accom¬ 
modation  and  the  imperfect  means  of  communication  generally  in  the  country. 
See  also  the  evidence  of  Mr.  Mangles  (Answers  1,625-1,633). 


THE  NEW  GOLD. 


273 


certain  forms  of  credit;  and  the  amount  of  these  credit 
media  standing  in  a  certain  large  proportion  to  the  coin  in 
the  country,  the  effect  of  introducing  a  million  sterling  into 
our  currency  would  be  to  increase  the  medium  of  circulation 
by  an  amount  very  much  greater  than  that  of  the  added  coin. 
Let  us  consider  for  a  moment  what  becomes  of  a  sum  of  coin 
or  bullion  received  into  England.  I  do  not  now  speak  of 
that  moving  mass  of  metal  which  passes  (so  to  speak)  through 
the  currency  of  the  country,  —  which,  received  to-day  into 
the  vaults  of  the  Bank  of  England,  is  withdrawn  to-morrow 
for  foreign  remittance,  — but  of  gold  which  is  permanently 
retained  to  meet  our  genuine  monetary  requirements.  Of 
such  gold  a  portion,  greater  or  less,  according  to  circum¬ 
stances,  will  always  find  its  way  into  the  channels  of  retail 
trade ;  and  so  far  as  it  follows  this  course,  its  effect  in  aug¬ 
menting  the  circulation  will  be,  as  in  India,  only  to  the 
extent  of  its  actual  amount.  But  a  portion  will  also  be 
received  into  the  banks  of  the  country,  where,  either  in  the 
form  of  coin,  or  of  notes  issued  against  coin,  it  will  consti¬ 
tute  an  addition  to  their  cash  reserves.  The  disposable  cash 
of  the  banks  being  thus  increased,  an  increase  of  credit 
operations  throughout  the  country  would  in  due  time  follow. 
The  new  coin  would  become  the  foundation  of  new  credit 
advances,  against  which  new  checks  would  be  drawn,  and  new 
bills  of  exchange  put  in  circulation,  and  the  result  would  be 
an  expansion  of  the  whole  circulating  medium  greatly  in 

excess  of  the  sum  of  coin  bv  which  the  new  media  were 

•/ 

supported.  Now,  credit,  whatever  be  the  form  which  it 
assumes,  so  long  as  it  is  credit ,  will  operate  in  purchases, 
and  affect  prices  in  precisely  the  same  way  as  if  it  were 
actually  the  coin  which  it  represents.  So  far  forth,  there¬ 
fore,  as  the  new  money  enables  the  country  to  support  an 
increase  of  such  credit  media,  —  to  support  them,  I  mean,  by 
cash  payments,  —  so  far  it  extends  the  means  of  sustaining 
gold  prices  in  the  country;  and  this  extension  of  the  cir¬ 
culating  medium  being  much  greater  than  in  proportion  to 
the  amount  of  added  coin,  the  means  of  sustaining  gold 
prices  will  be  in  the  same  degree  increased.  Thus,  suppos- 

18 


274 


ECONOMIC  HISTORY . 


ing  the  ratio  of  the  credit  to  the  coin  circulation  of  the 
country  to  be  as  four  to  one  (and  the  proportion  is  greatly  in 
excess  of  this),  the  addition  of  one  million  sterling  of  coin 
would  be  equivalent  to  an  increase  in  the  aggregate  circula¬ 
tion  of  four  millions  sterling,1  and  one  million  sterling  of 
gold  would  consequently,  in  England,  for  a  given  extent  of 
business,  support  the  same  advance  in  gold  prices  as  four 
times  that  amount  in  India.  It  follows  from  these  consid¬ 
erations,  that  in  order  to  raise  prices  throughout  a  given 
range  of  transactions  to  any  required  level,  the  quantity  of 
metallic  money  which  will  be  necessary  will  vary  in  differ¬ 
ent  countries,  according  to  the  constitution  of  their  curren¬ 
cies;  the  requirements  of  each  increasing  generally  in  an 
inverse  ratio  with  the  efficiency  of  its  banking  institutions. 

We  may  thus  see  how  very  unequal  will  be  the  operation 
of  the  gold  discoveries  with  respect  to  commercial  com¬ 
munities.  The  reduction  in  the  cost  of  gold  to  which  they 
have  led  has,  as  we  have  seen,  produced  in  the  gold  countries 
a  twofold  rise  of  gold  prices ;  and  supposing  the  present  con¬ 
ditions  of  raising  gold  to  continue,  the  same  cause  must 
ultimately  lead  to  the  same  result  throughout  the  world, 
imposing  upon  each  country  the  necessity  of  so  enlarging 
its  currency  as  to  admit  of  this  advance.  But  we  have 
seen  that  the  quantity  requisite  for  this  purpose  varies  ac¬ 
cording  to  the  monetary  status  of  the  country  for  which  it  is 
required ;  and  inasmuch  as  the  new  money  must  be  paid  for 
by  commodities,  the  abstraction  of  commodities,  and  there¬ 
fore  the  loss  of  the  means  of  well-being,  to  which  each  coun¬ 
try  must  submit,  will  vary  with  the  same  circumstance.  On 

1  Strictly  speaking,  this  conclusion  would  not  follow  on  the  above  supposi¬ 
tion,  the  efficiency  of  different  forms  of  credit  in  performing  the  work  of  circu¬ 
lation  being  (as  pointed  out  by  Mr.  Mill,  “Principles  of  Political  Economy,” 
vol.  ii.,  pp.  58-61)  different,  and  only  some  of  them  being  in  this  respect  equal 
to  coin.  But  such  distinctions  do  not  affect  the  general  truth  of  the  principle 
contended  for  in  the  text,  that  the  necessity  for  coin  varies  inversely  with  the 
use  of  credit.  Besides,  as  I  intimated,  the  proportion  of  credit  to  coin  in  our 
circulation  is  much  greater  than  I  have  assumed ;  and  a  million  of  coin  taken 
into  our  currency  would  really  be  equivalent  to  more  than  four  millions  added 
to  a  purely  metallic  one. 


THE  NEW  GOLD. 


275 


the  supposition,  therefore,  on  which  we  are  arguing,  the 
quantity  of  new  money  which  England  would  require  would 
he,  when  compared  with  the  extent  of  her  business,  ex¬ 
tremely  small,  and  her  loss  of  real  wealth  small  proportion¬ 
ally.  The  same  would  be  true  of  the  United  States,  where 
credit  institutions  have  also  attained  a  high  degree  of 
efficiency,  and  whose  paper  consequently  forms  a  large  pro¬ 
portion  of  the  whole  circulation.  In  France,  the  use  of 
credit  being  more  restricted,  the  requirements  for  coin 
would  be  greater,  and  consequently  also  the  loss  of  consum¬ 
able  commodities ;  while  in  India  and  China,  and  indeed  in 
Asiatic  communities  generally,  the  circulating  medium  be¬ 
ing  almost  purely  metallic,  the  requirements  for  coin  would, 
in  proportion  to  the  business  in  which  it  was  employed, 
attain  their  maximum,  with  a  corresponding  maximum  of 
loss  in  the  elements  of  well-being.1 

The  operation  of  this  principle  is  indeed,  in  the  actual 
circumstances  of  the  world,  in  some  degree  concealed  by  the 
complex  conditions  under  which  it  comes  into  play.  Thus 
Great  Britain  and  the  United  States,  instead  of  obtaining 
the  smallest  shares,  receive  in  the  first  instance  nearly  the 
whole  of  the  new  gold.  On  the  other  hand,  the  quantity 
which  goes  to  India  and  China  from  the  gold  countries  is 
comparatively  trifling;2  and  although  a  large  drain  of  treas¬ 
ure  has  set  in  thither  from  Europe,  yet  this  consists  chiefly 
of  silver.  If,  however,  passing  by  the  accidents  of  the 

1  It  is  curious  to  observe  the  contradictions  in  which  persons  are  involved 
who,  still  under  the  influence  of  the  mercantile  theory  of  wealth  (and  there  are 
few  even  among  professed  economists  who  are  free  from  its  influence),  are 
nevertheless  sensible  from  experience  of  the  advantages  of  a  system  with  which 
it  is  incompatible.  Tims  several  witnesses  before  the  late  Committee  on  Indian 
Colonization  refer  to  the  large  influx  of  silver  into  India  in  recent  years  as  a  sure 
indication  of  the  increasing  prosperity  of  that  country  ;  yet,  almost  in  the  same 
breath,  they  speak  of  the  deficiency  of  banking  accommodation  as  among  its 
most  pressing  wants.  Now,  it  is  certain  that,  just  in  proportion  as  banking  ac¬ 
commodation  is  extended,  the  absorption  of  silver  by  India  will  decline ;  whence 
it  would  follow,  if  the  reasoning  of  the  witnesses  be  sound,  that  the  effect  of 
the  extension  of  barks  would  be  to  check  the  growing  prosperity  of  the  coun¬ 
try.  See  “  Minutes  of  Evidence,”  Questions  1,625-1,633;  2,221-2,223. 

2  This  order  in  the  diffusion  of  the  new  gold  has  not  been  sustained.  See 
ante,  p.  252,  note. 


276 


ECONOMIC  HISTORY. 


movement,  we  attend  to  its  essentials  we  sliall  find  that  the 
results  are  entirely  conformable  to  the  principle  I  have  en¬ 
deavored  to  describe.  For  though  the  bulk  of  the  new  gold 
comes  in  the  first  instance  to  England  and  the  United  States, 

—  determined  thither  by  the  course  of  international  demand, 

—  yet  England  and  the  United  States  do  not  form  its  ulti¬ 
mate  destination.  The  monetary  requirements  of  these  coun¬ 
tries  being  easily  satisfied,  the  mass  of  the  metal  on  reaching 
these  markets  becomes  immediately  disposable  for  foreign 
purchases,  by  which  means  the  United  States  and  England  are 
enabled  to  transfer  to  other  countries  this  unprofitable  stock, 
the  commodities  with  which  in  the  first  instance  they  parted 
being  replaced  by  others  which  they  more  require.  So  also, 
although  the  metallic  drain  to  the  East  is  composed  princi¬ 
pally  of  silver,  the  efflux,  at  least  in  its  present  proportions, 
is  not  the  less  certainly  the  consequence  of  the  increased  pro¬ 
duction  of  gold,  for  the  silver  of  which  it  consists  has  been 
displaced  from  the  currencies  of  Europe  and  America  by  the 
gold  of  Australia  and  California;  and  the  drain  to  the  East  is 
only  not  a  golden  one,  because  silver  alone  is  in  that  region 
the  recognized  standard.  As  the  final  result  of  the  whole 
movement,  we  find  that,  while  the  metallic  systems  of  Eng¬ 
land  and  the  United  States  are  receiving  but  small  perma¬ 
nent  accessions,  those  of  India  and  China  are  absorbing 
enormous  supplies.  The  former  countries,  though  the  first 
recipients  of  the  treasure,  yet,  not  requiring  it  for  domestic 
purposes,  are  enabled  to  shift  the  burden  to  others,  whose 
real  wealth  they  command  in  exchange,  while  the  latter, 
requiring  what  they  receive,  are  compelled  to  retain  it. 
Having  parted  with  their  commodities  for  the  new  money, 
they  are  unable  afterwards  to  replace  them.  As  their  stock 
of  coin  increases,  their  means  of  well-being  decline,  and 
they  become  the  permanent  victims  of  the  monetary 
disturbance. 

But,  secondly,  we  conclude  that  the  loss  of  real  wealth 
resulting  from  the  augmentation  of  their  currencies  would 
in  particular  countries  be  compensated,  and  might  in  some 
be  even  converted  into  positive  gain,  by  the  disturbance 


THE  NEW  GOLD. 


277 


which,  during  the  period  of  transition,  would  take  place  in 
international  values.  As  has  been  already  remarked,  a 
general  rise  of  prices  in  all  countries,  if  simultaneous  and 
uniform,  since  it  leaves  the  proportions  in  which  .commod¬ 
ities  are  exchanged  undisturbed,  leads  to  no  change  in  inter¬ 
national  values,  and  produces  no  effect  upon  national  inter¬ 
ests.  But  where  prices  rise  unequally,  international  values, 
and  through  these,  national  interests  are  affected.  We  have 
therefore  to  consider  how  far,  in  the  actual  circumstances  of 
the  world,  a  rise  of  prices  in  particular  countries,  unaccom¬ 
panied  by  a  corresponding  advance  in  others,  is  possible, 
and,  in  so  far  as  it  is  possible,  in  what  order  the  several 
changes  may  be  expected  to  occur. 

As  regards  the  question  of  possibility,  this  is  placed  be¬ 
yond  controversy  by  the  example  of  California  and  Austra¬ 
lia.  It  is  a  matter  of  fact  that  prices  in  those  regions  have 
advanced  in  a  twofold  proportion,  while  no  corresponding 
rise  of  prices  has  occurred  throughout  the  world.  The  cir¬ 
cumstances,  however,  of  the  gold  countries  will  probably  be 
thought  of  too  exceptional  a  character  to  form  the  basis  of 
any  general  conclusion;  and  it  will  therefore  be  desirable  to 
advert  for  a  moment  to  the  causes  which  produced  in  Cali¬ 
fornia  and  Australia  that  local  elevation  of  price,  with  a 
view  to  consider  how  far  the  same  conditions  are  capable  of 
being  realized  elsewhere. 

These  causes,  as  was  formerly  shown,1  were  the  special 
facilities  for  producing  gold  enjoyed  by  California  and  Aus¬ 
tralia,  combined  with  the  limited  range  of  their  domestic 
transactions.  The  sudden  cheapening  of  gold,  involving  a 
corresponding  increase  in  money  earnings,  placed  an  extra¬ 
ordinary  premium  on  the  production  of  the  metal,  while  the 
limited  range  of  their  domestic  trade  rendered  the  necessary 
enlargement  of  their  monetary  systems  an  easy  task.  On 
the  other  hand,  the  immense  extent  of  the  aggregate  com¬ 
merce  of  the  world  required,  in  order  to  secure  a  similar 
advance,  a  proportional  increase  in  its  aggregate  stock  of 


1  See  Cairnes,  pp.  25,  26. 


278 


ECONOMIC  HISTORY. 


money,  an  augmentation  which  could  only  be  accomplished 
after  the  lapse  of  a  considerable  time.  Prices  therefore  rose 
rapidly  in  the  gold  countries,  while  over  the  area  of  general 
commerce  the  rise  had  been  but  slow. 

Such  being  the  circumstances  which  produced  the  local 
divergence  of  prices  to  which  I  have  called  attention,  it  will 
at  once  be  seen  that  of  the  two  conditions  which  I  have 
stated,  the  latter  —  the  necessary  enlargement  of  the  local 
currency  —  may  in  most  countries,  though  not  in  all  at  the 
same  time,  be  fulfilled,  if  not  with  the  same  rapidity  as  in 
Australia  and  California,  still  after  no  very  long  delay.  It 
has  been  computed,1  for  example,  that  the  total  quantity 
of  gold  coin  circulating  in  Great  Britain  amounts  to 
<£75,000,000  sterling.  Assuming  this  to  be  correct,  it 
would  follow  (all  other  conditions  being  supposed  identical) 
that  an  addition  of  <£75,000,000  would  be  sufficient  to  effect 
an  elevation  of  our  local  prices  equivalent  to  that  which  has 
occurred  in  Australia.  Now  at  the  present  rate  of  produc¬ 
tion,  the  quantity  of  gold  which  arrives  annually  in  Great 
Britain  cannot  fall  much  short  of  £30,000,000  sterling;2  so 
that  were  we  merely  to  retain  all  that  we  receive,  we  should 
at  the  end  of  two  years  and  a  half  be  in  a  position,  so  far  as 
the  augmentation  of  our  currency  is  concerned,  to  maintain 
the  same  advance  in  price  as  has  occurred  in  the  gold  coun¬ 
tries.  If,  then,  prices  in  Great  Britain  have  not  risen  in 
the  same  degree,  the  result,  it  is  evident,  cannot  be  due  to 
the  difficulty  of  procuring  the  supply  of  gold  necessary 
for  the  enlargement  of  our  currency.  It  remains,  therefore, 
to  be  considered  how  far  those  special  facilities  for  procuring 
gold  which  have  operated  in  the  gold  countries  may  come 
into  play  in  other  parts  of  the  world. 

The  extraordinary  facilities  for  procuring  gold  enjoyed 

1  “  History  of  Prices/’  vol.  vi.,  App.  xxii.  This  also  is  Mr.  M’Culloch’s  es¬ 
timate  :  “  Encyclopaedia  Britannica,”  article  “  Precious  Metals,”  p.  465.  [It 
will  be  borne  in  mind  that  these  estimates  apply  to  the  period  immediately 
preceding  the  first  publication  of  these  Essays  (1859-60).] 

2  [£20,000,000  would  have  been  nearer  the  mark,  but  at  the  time  this  paper 
was  written  no  trustworthy  statistics  of  gold  imports  existed.  Either  amount, 
however,  answers  equally  well  the  purpose  of  the  argument  (1872).] 


THE  NEW  GOLD. 


279 


by  Australia  and  California  depend,  of  course,  on  the  posses¬ 
sion  of  their  gold  mines ;  and  this  being  so,  it  might  seem 
as  if  all  countries,  not  being  like  them  auriferous,  were  by 
the  nature  of  the  case  precluded  from  fulfilling  this  condition 
of  the  problem;  but  this  by  no  means  necessarily  follows, 
as  will  be  evident  if  we  reflect  that  there  are  other  modes  of 
obtaining  gold  than  by  direct  production,  of  which  modes 
the  efficiency  enjoyed  by  different  countries  differs  almost 
as  much  as  the  degrees  of  fertility  in  different  gold  mines. 
Where  countries  do  not  themselves  produce  gold,  the  mode 
by  which  they  obtain  it  is  through  their  foreign  trade. 
Now,  it  is  a  fact  well  known  to  economists 1  that,  with  refer¬ 
ence  to  the  cost  of  commodities  the  terms  on  which  foreign 
trade  is  carried  on  differ  greatly  in  different  countries,  the 
labor  of  some  going  much  farther  in  commanding  foreign 
productions  than  that  of  others.  According,  however,  to 
the  conditions  on  which  foreign  productions  generally  are 
obtainable,  will  be  those  on  which  gold  may  be  obtained. 
If  a  country  possess  special  facilities  for  supplying  markets 
where  gold  can  be  given  in  exchange,  it  will  obtain  its  gold 
more  cheaply,  at  a  less  sacrifice  of  labor  and  capital,  than 
countries  which  do  not  share  these  facilities;  and  among 
such  countries  it  will  therefore  occupy  precisely  the  same 
position  as  an  auriferous  country  whose  mines  are  of  more 
than  the  usual  richness  among  the  countries  which  yield 
gold.  It  is  thus  possible  for  a  non-auriferous,  no  less  than 
for  an  auriferous  country,  to  possess  exceptional  facilities  in 
the  means  of  procuring  gold,  and  therefore  to  fulfil  the  sec¬ 
ond  of  the  conditions  by  which  a  divergence  of  local  prices 
from  the  ordinary  level  of  the  world  may  be  effected. 

Now  it  appears  to  me  there  are  two  countries  which  pos¬ 
sess  in  an  eminent  degree  the  qualifications  requisite  for 
attaining  this  result,  I  mean  Great  Britain  and  the  United  \ 
States,  the  former,  as  being  par  excellence  the  great  manu¬ 
facturer  among  civilized  nations,  — the  manufacturer  more 

1  See  Ricardo’s  “Works,”  chap,  vii.,  on  Foreign  Trade.  Mill’s  “Principles 
of  Political  Economy,”  chaps,  xvii.,  xix.  Also,  Senior’s  Essay,  “  On  the  Cost 
of  Obtaining  Money.” 


280 


ECONOMIC  HISTORY. 


particularly  of  descriptions  of  goods,  —  as  cotton,  woollen, 
linen,  and  iron,  which  enter  largely  into  the  consumption  of 
the  classes  by  whom  chiefly  the  gold  countries  are  peopled ; 
and  the  latter,  as  the  principal  producer  of  raw  material,  as 
well  as  of  certain  commodities,  —  as  grain,  tobacco,  sugar, 
and  rice,  —  which  are  also  largely  consumed  by  the  same 
classes.  In  these  circumstances  Great  Britain  and  the  United 
States  enjoy  peculiar  advantages  in  the  markets  of  the  gold 
countries,  and  these  advantages  are  extended  and  confirmed 
by  other  important  incidents  of  their  position.  Thus  they 
possess  the  greatest  mercantile  marine  in  the  world,  by  which 
they  are  enabled  to  give  the  fullest  scope  to  their  manufac¬ 
turing  and  agricultural  superiority,  while  by  race,  language, 
and  religion  they  are  intimately  connected  with  the  produc¬ 
ers  of  the  new  gold,  —  a  connection  from  which  spring  ties, 
moral,  social,  and  political,  to  strengthen  and  secure  those 
which  commerce  creates.  Great  Britain  and  the  United 
States  thus  possess  in  their  foreign  trade  a  rich  mine,1 
worked  by  their  manufacturers,  planters,  and  farmers,  tended 
by  their  mercantile  marine,  and  protected  by  their  naval 
power,  —  a  mine  by  means  of  which  they  are  enabled  to  ob¬ 
tain  their  gold  on  terms  more  favorable  than  other  nations. 
The  effect  of  this  in  ordinary  times  is  shown  by  a  scale  of 
money  rates,  wages,  salaries,  and  incomes,  permanently 
higher  than  that  which  elsewhere  prevails ;  but  in  times  of 
monetary  disturbance  like  the  present,  when  the  cost  of 
gold  having  been  reduced  its  value  is  falling,  these  advan¬ 
tages,  it  seems  to  me,  must  tell,  as  analogous  advantages 
have  told  in  the  gold  countries,  in  a  more  rapid  realization 
of  the  results  which  are  in  store,  —  in  a  quicker  ascent 
towards  that  higher  level  of  prices  and  income  which  the 
cheapened  cost  of  gold  is  destined  ultimately  to  produce. 

There  is  reason,  therefore,  on  considerations  of  theory,  to 
expect  a  repetition  in  England  and  America  of  that  phe- 


1  The  mine  worked  by  England  is  the  general  market  of  the  world ;  the 
miners  are  those  who  produce  those  commodities  by  the  exportation  of  which 
the  precious  metals  are  obtained.  —  Senior’s  Essay  “  On  the  Cost  of  Obtaining 
Money,”  p.  15. 


THE  NEW  GOLD - 


281 


nomenon  which  has  been  already  exhibited  in  Australia  and 
California,  —  a  divergence  of  local  monev-rates  from  the 
average  level  of  surrounding  countries.  On  a  future  occa¬ 
sion  I  shall  endeavor  to-ascertain  how  far,  in  the  case  of 
Great  Britain,  these  a  priori  conclusions  are  supported  by 
facts, — how  far  prices  and  incomes  have  here,  under  the 
influence  of  the  gold  discoveries,  outstripped  the  correspond¬ 
ing  movement  in  other  countries.1  Having  settled  this 
point,  we  shall  be  in  a  position  to  form  a  general  estimate  of 
the  benefit  which  may  thence  accrue  to  us.  Meanwhile, 
however,  I  may  in  conclusion  point  out  the  mode  in  which 
the  advantages  incident  to  the  monetary  position  we  shall 
occupy  are  likely  to  be  realized. 

And  here  it  may  be  well  to  call  the  reader’s  attention  to 
the  distinction,  sometimes  overlooked,  between  a  fall  in  the 
value  of  gold  and  a  rise  in  the  price  of  commodities.  A  rise 
in  the  price  of  commodities  if  general,  implies  commonly  a 
fall  in  the  value  of  money ;  but,  according  to  the  ordinary 
use  of  language,  alike  by  economists  and  common  speech, 
money  would,  I  apprehend,  in  certain  circumstances,  be  said 
to  have  fallen  in  value,  even  though  the  prices  of  large 
classes  of  commodities  remain  unaffected.  For  example, 
supposing  improvements  to  have  been  effected  in  some 
branch  of  production  resulting  in  a  diminished  cost  of  the 
commodity,  the  value  of  money  remaining  the  same,  prices 
would  fall ;  if  under  such  circumstances  prices  did  not  fall, 
that  could  only  be  because  money  had  not  remained  the 
same,  but  had  fallen  in  value.  The  continuance  of  prices 
unaltered  would,  therefore,  under  such  circumstances,  amount 
to  proof  of  a  fall  in  the  value  of  gold.  Now,  when  in  con¬ 
nection  with  this  consideration,  we  take  account  of  the  fact 

1  [Some  evidence  on  the  point  will  be  found  in  the  Appendix  (see  Cairnes) ; 
but  the  inquiry  here  contemplated  was  never  carried  into  effect.  A  very  inter¬ 
esting  and  carefully  prepared  paper  on  the  subject,  however,  was  read  some 
years  later  by  my  friend  Professor  Jevons,  before  the  London  Statistical  Society, 
when  I  had  the  satisfaction  to  find  that  the  results  of  his  entirely  independent 
investigations  to  a  very  large  extent  corroborated  the  conclusions  at  which  I 
had  arrived,  mainly  by  way  of  deduction  from  the  general  principles  of  the 
science.] 


282 


ECONOMIC  HISTORY. 


that  over  the  greater  portion  of  the  field  of  British  industry 
improvement  is  constantly  taking  place,  it  is  obvious  that 
the  mere  movements  of  prices  here,  taken  without  reference 
to  the  conditions  of  production,  are  no  sure  criteron  of 
changes  in  the  value  of  gold. 

The  truth  is,  in  a  large  class  of  commodities,  in  all  those 
to  which  mechanical  or  chemical  inventions  are  extensively 
applicable,  even  on  the  supposition  of  a  very  great  deprecia¬ 
tion  of  gold,  no  considerable  advance  in  price  is  probable. 
Gold,  for  example,  might  have  fallen  since  the  beginning  of 
the  present  century  to  the  extent  of  75  per  cent,  that  is  to 
say,  four  sovereigns  now  might  be  equal  to  no  more  than 
one  sovereign  at  the  commencement  of  the  period,  and  yet 
in  a  large  class  of  manufactured  goods  no  advance  in  price 
would  be  apparent,  the  reduction  in  the  cost  of  production 
being  in  more  than  an  equal  proportion.  In  ordinary  times 
agricultural  operations  escape  in  a  great  degree  the  influence 
of  industrial  progress;  but  within  the  last  ten  years,  that  is 
to  say,  since  the  repeal  of  the  Corn  Laws,  which  nearly 
synchronized  with  the  gold  discoveries, — the  spirit  of  im¬ 
provement  has  been  as  busy  in  agriculture  as  in  any  other 
department  of  industry,  and  in  conjunction  with  importa¬ 
tions  from  foreign  countries  has  acted,  and  must  for  some 
time  at  least  continue  to  act  powerfully  upon  the  price  of  raw 
products  in  this  country. 

The  depreciation  of  gold,  therefore,  may  be  realized  either 
in  a  corresponding  advance  of  prices,  or  in  the  neutraliza¬ 
tion  of  a  fall  which,  in  the  absence  of  depreciation,  would 
have  occurred ;  but  in  whatever  form  it  may  come  to  us,  our 
gain  or  loss  as  a  nation  will  be  the  same,  and  will  depend 
upon  the  condition  I  have  stated,  — the  more  or  less  rapid 
depreciation  of  our  currency  as  compared  with  the  curren¬ 
cies  (convertible,  like  ours,  into  gold)  of  other  countries. 
Whether,  the  conditions  of  production  remaining  unaltered, 
the  depreciation  be  indicated  by  a  corresponding  advance  of 
prices,  or,  those  conditions  undergoing  improvement,  the 
fall  in  the  value  of  gold  merely  operates  in  neutralizing,  as 
regards  price,  the  effects  of  the  cheapened  cost  of  commodi- 


THE  NEW  GOLD. 


283 


ties, —  in  either  case  the  gold  price  of  the  products  of  English 
labor  and  abstinence  will  rise.  A  given  exertion  of  English 
industry  will  reap  a  larger  gold  reward  than  before;  and 
foreign  commodities  not  rising  in  price  in  the  same  degree, 
the  larger  gold  reward  will  indicate,  over  so  much  of  our 
expenditure  as  is  directed  to  foreign  productions ,  a  real  aug¬ 
mentation  of  well-being.  As  regards  that  portion  of  our 
expenditure  which  falls  upon  the  products  of  our  own  indus¬ 
try,  individuals  and  classes  will,  according  to  circum¬ 
stances,1  be  benefited  or  injured  by  the  change;  but  as  a 
nation,  we  shall  neither  gain  nor  lose,  since  here  the  in¬ 
creased  cheapness  of  gold  will  be  exactly  neutralized,  either 
by  a  corresponding  advance  in  price,  or  by  the  prevention  in 
the  same  degree  of  a  fall  which  would  otherwise  have  taken 
place.  It  is  in  this  way,  by  the  increased  command  which 
she  obtains  over  foreign  markets  by  her  cheap  gold,  —  and 
not,  as  is  commonly  supposed,  by  finding  an  outlet  for  her 
wares  in  California  and  Australia,  that  England  will  benefit 
by  the  gold  discoveries.  That  outlet  for  her  productions,  — 
were  the  movement  to  stop  here,  —  however  it  might  benefit 
individuals,  would  for  the  country  at  large  be  an  injury  and 
not  a  boon ;  it  would  deprive  her  of  that  which  might  con¬ 
duce  to  her  comfort  and  happiness,  and  would  give  her  a 
“ breed  of  barren  metal”  in  exchange.  But  the  movement 
does  not  stop  here.  The  money  which  she  obtains  from  the 
gold  countries,  instead  of  absorbing,  like  India  or  China,  she 
employs  in  purchasing  the  goods  of  other  nations.  It  is  in 
the  enlarged  command  which  she  acquires  over  such  goods 
that  her  gain  consists,  and  it  is  thus  that  she  indemnifies 
herself,  though  at  the  expense  of  the  nations  who  ultimately 
retain  the  new  gold  for  the  loss,  the  indubitable  loss,  which 
she  is  called  on  in  the  first  instance  to  sustain. 


1  On  this  point  see  Cairnes,  p.  147,  et  seq. 


284 


ECONOMIC  HISTORY. 


XI. 

FRANCE  SOUS  LE  SECOND  EMPIRE. 

From  Levasseur’s  IIistoire  des  Classes  Ouvrieres  en  France 
depuis  1789,  jusqu’a  nos  jours.1  Vol.  ii.  pp.  307-321. 

T~\EPUIS  quinze  ans,  trois  grand  fails  dconomiques  ont 
exerce  en  France  une  influence  considerable  sur  la 
production  manufacturiere ;  le  ddveloppement  du  credit,  la 
multiplication  des  chemins  de  fer  et  la  rdforme  douaniere. 

11  entrait  dans  les  vues  du  gouvernement  de  provoquer 
l’esprit  d’entreprise.  L’annde  1852  vit  se  former  deux  dtab- 
lissements  d’une  nature  tres-diverse,  mais  qui  tous  deux  de- 
vaient  concourir  au  meme  but,  celui  de  fournir  des  capitaux 
au  travail:  le  Credit  foncier,  et  le  Credit  mobilier. 

Le  premier,  depuis  longtemps  reclame  par  M.  Wolowski, 
se  proposait  de  venir  en  aide  a  l’agriculture  en  avan^ant  sur 
premiere  hypotlieque  a  la  propriete  fonciere  des  sommes  rem- 
boursables  par  annuites ;  en  realite,  les  prets  agricoles,  qui 
augmentent  aujourd’hui,  ont  dte  les  plus  lents  a  se  developper, 
et  la  nature  de  sa  clientele  l’a  fait  servir  plus  a  la  construc¬ 
tion  des  maisons  et  aux  travaux  publics  dans  les  communes 
qu’a  la  culture  proprement  dite :  a  ce  titre,  il  appartient  a 
l’histoire  de  l’industrie.  Le  second,  crdd  et  dirigd  par  M.  E. 
Pdreire,  est  une  puissante  banque  de  commandite  et  de  spec¬ 
ulation,  non  sans  analogic  avec  celles  que  recommendait  le 
saint-simonisme.  II  etait  destind  par  ses  statuts  a  fonder  ou 
a  soutenir  de  grandes  entreprises,  et  il  a,  en  effet,  donnd  nais- 
sance  aux  chemins  de  fer  du  Midi,  a  la  compagnie  immobiliere 
de  Paris,  au  gaz  de  Marseille,  aux  paquebots  transatlantiques ; 
il  devait  etre,  en  raison  meme  de  son  caractere,  tres-vivement 


1  Paris  :  Libraire  de  L.  Hachette  et  Cie,  1867. 


FRANCE  SOUS  LE  SECOND  EMPIRE. 


285 


affects  par  toutes  les  influences  de  hausse  et  de  baisse,  et  sa 
fortune  ddpendait  entierement  de  l’habilete  de  ses  directeurs. 

La  Banque  de  France,  dont  le  gouvernement  avait  le  droit 
de  suspendre  le  privilege  en  1855,  fut  affranchie  de  cette 
crainte  et  autorisee  a  faire  des  avarices  sur  depot  d’actions  et 
d’obligations  de  cliemin  de  fer : 1  la  speculation  en  usa  large- 
ment.  Quelques  anndes  apres,  la  Banque  obtenait  par  une 
loi  la  prorogation  de  son  privilege  jusqu’en  1897,  aux  prix  de 
100  millions  pretds  a  l’Etat  et  fournis  par  une  emission  de 
nouvelles  actions ;  la  Banque  pouvait  Clever  le  taux  de  son 
escompte  au-dessus  de  6  pour  100,  et  le  gouvernement  pouvait 
exiger,  dix  ans  aprds  la  promulgation  de  la  loi,  qu’elle  eut  au 
moins  une  succursale  par  departement.2 

“Les  operations  de  la  Banque  se  sont  considerablement 
ameliorees,”  disait  le  gouverneur,  en  parlant  de  la  situation  en 
1852 ;  “  le  commerce  et  l’industrie  out  repris  leur  essor.”  En 
effet,  le  montant  des  operations  s’dtait  dleve  d’un  milliard  et 
demi,  chiffre  de  1851,  a  deux  milliards  et  demi.  Le  produit 
des  impdts  indirects  s’dtait  notablement  accru ;  la  rente  avait 
depasse  le  pair ;  toutes  les  valeurs  de  bourse  avaient  ete  em- 
portees  dans  le  meme  mouvement,  et  les  marcliandises,  sous 
la  triple  impulsion  de  l’abondance  de  l’or,  d’une  consommation 
plus  active,  et  d’une  speculation  audacieuse,  encherissaient 
cliaque  jour. 

Ce  fut  l’age  d’or  de  la  Bourse.  Londres,  qui  avait  ete 
depuis  le  commencement  du  sidcle  le  principal  marche  des 
capitaux  et  des  grandes  entreprises  en  Europe,  cdda  le  pas  a 
Paris.  L’elan  dtait  tel  qu’il  permit  au  commerce  de  francliir 
le  cholera,  la  disette,  la  guerre  d’Orient,  et  a  l’Etat  d’emprun- 
ter  un  milliard  et  demi  sans  briser  le  ressort  du  credit.  Les 
capitaux,  a  peine  formes,  etaient  absorbes ;  les  travaux  pub¬ 
lics,  les  emprunts,  la  disette  elle-meme,  tout  y  contribuait ; 
on  speculait  a  la  hausse,  et  les  cours  s’elevaient. 

Cependant  les  affaires  etaient  devenues  plus  difficiles  en 
1856 :  le  gouvernement  crut  utile  d’enrayer  lui-meme  la  spd- 
culation3  et  de  fane  une  loi  restrictive  sur  les  socidtds  en  com- 

1  Decret  du  28  mars,  1852.  2  Loi  du  9  juin,  1857. 

3  Voir  au  Mon.,  la  note  du  9  mars,  1856. 


286 


ECONOMIC  HISTORY. 


mandite  par  actions.1  La  langueur  continua  cependant  en 
1857,  et  l’abondance  de  la  r^colte  rcndait  inevitable  la  baisse 
des  denrees,  lorsque,  vers  le  mois  d’aout,  la  crise  eclata  avec 
violence  aux  Etats-Unis.  Elle  se  communiqua  rapidement  a 
Londres,  a  Hambourg,  a  Paris.  Quoique  moins  rudement 
6prouvee  que  ses  voisines,  la  France  vit,  comme  elles,  les 
sources  du  credit  tarir ;  la  speculation  dut  liquider,  et  Fannie 
1858  fut  marquee  par  une  baisse  gendrale  des  marcliandises2 
et  par  un  ralentissement  des  transactions. 

La  guerre  d’ltalie  qui  survint  l’annee  suivante,  et  ses  con¬ 
sequences  qui  se  firent  sentir  jusqu’en  1862,  empeclierent  les 
affaires  de  reprendre  leur  essor  jusqu’au  jour  ou  le  combat 
d’Aspromonte  fit  croire  a  la  consolidation  du  trone  de  Yictor- 
Emmanuel.  Les  cours  se  releverent  alors,  et  l’esprit  d’entre- 
prise  se  ranima.  Mais  une  autre  cause  de  malaise  pesait 
deja  sur  le  marche :  la  guerre  d’Amerique  privait  l’Europe 
de  coton  et  reduisait  a  la  misere  les  districts  manufacturiers 
de  l’Angleterre  et  de  la  France.  Une  crise  monetaire  s’en- 
suivit ;  en  1864,  l’escompte  de  la  Banque  de  France  monta 
a  8  pour  100, 3  et  le  gouvernement,  sollicite  par  une  petition 
de  trois  cents  ndgociants  et  par  une  contrep^tition  de  la 
Banque,  ordonna  une  enquete  sur  le  regime  du  credit.  Cette 
crise  s’apaisait  a  son  tour,  lorsque  eclata  la  guerre  du  Dane- 
mark,  puis  la  guerre  d’Allemagne.  Les  agitations  de  la  po¬ 
litique,  dans  le  vieux  et  dans  le  nouveau  monde,  contrarient 
frequemment,  depuis  dix  ans,  le  ddploiement  pacifique  des 
forces  du  travail  marchant  a  la  conquete  de  la  matiere. 

Une  ville  a  particulierement  souffert,  et  souffre  aujourd’hui 
plus  que  les  autres,  de  la  langueur  des  affaires  dont  se  plaint 
le  commerce.  C’est  Lyon,  dont  la  nombreuse  population 
ouvriere,  dependant  presque  tout  entiere,  pour  sa  subsistance, 
d’une  seule  industrie  de  luxe,  est  toujours  la  premiere  a 
s’affaisser  sous  le  coup  des  crises  et  la  derniere  a  se  relever. 

1  Loi  da  17  juillet,  1850.  II  s’etait  forme,  en  1852,  21  societes  de  ce  genre  ; 
en  1853,  25 ;  en  1854,  36 ;  en  1855,  18 ;  en  1850,  17.  II  s’en  forma,,en  1857,  6 ; 
13  en  1858,  et  12  en  1859. 

2  Voir,  sur  cette  crise,  la  Question  de  Vor,  par  E.  Levasseur. 

3  Au  mois  de  mai. 


FRANCE  SOUS  LE  SECOND  EMPIRE. 


287 


Elle  avait  developpe  ses  relations  ext^rieures ;  la  guerre 
d’Am^rique  lui  a  ete  funeste;  de  84  millions  en  1858,  Im¬ 
portation  de  la  soierie  est  tornbee  a  11  millions  en  I860.1  Le 
meilleur  remede  pour  elle  serait,  a  cdte  de  son  industrie  de 
luxe,  soumise  aux  caprices  de  la  mode  et  aux  variations  de 
la  fortune,  la  creation  d'une  industrie  commune  ayant  un 
large  debouche. 

Neanmoins,  malgr6  les  obstacles,  le  travail  a  brillamment 
deploy^  ses  forces.2  La  Banque  de  France,  dont  les  escomptes, 
a  Paris,  avaient  une  seule  fois  atteint  1,329  millions,  sous  le 
regne  de  Louis-Philippe,  atteignit  de  nouveau  et  depassa  ce 

chiffre  en  1856 ;  en  1865,  elle  faisait  2,458  millions.  Elle 

♦ 

6tait  alors  devenue  la  seule  banque  d’emission  et  la  regula- 
trice  souveraine  du  credit  en  France ;  les  operations  de  ses 
succursales,  jointes  au  chiffre  des  affaires  de  Paris,  formaient, 
a  la  meme  epoque,  un  total  de  7,422  millions,  tandis  qu’en 
1847  les  banques  departementales  et  la  Banque  de  France 
n’atteignaient  que  2,075  millions.  Bans  le  meme  temps,  sans 
que  le  commerce  des  banques  privecs  parut  diminuer,3  se  fon- 
daient  d’autres  grands  etablissements,  comme  la  Society  gene- 
rale  de  credit  industriel  et  commercial,4  la  Society  de  depots 
et  de  comptes  courants,5  la  Soci^te  generale  pour  favoriser 
le  commerce  et  l’industrie  en  France.6  L’usage  des  cheques, 
autrement  dit  l’habitude  de  deposer  en  banque  ses  fonds  de 
caisse  et  de  faire  ses  paiements  en  mandats,  commence,  quoique 
trop  lentement,  a  se  naturaliser  en  France  et  a  mettre  une  plus 
grande  masse  de  capitaux  a  la  disposition  du  credit. 

Parmi  les  entreprises  qui  devaient  obtenir  la  faveur,  les 
chemins  de  fer  etaient  au  premier  rang.  On  avait  souvent 
reproche  a  la  France  de  s’etre  laisse  devancer  par  ses  voisins, 
et  l’activite  imprimee  aux  constructions  durant  la  seconde 
moithi  du  regne  de  Louis-Philippe  par  la  loi  de  1842,  s’^tait 

1  Lettre  de  M.  Arles  Dufour  a  1  'Opinion  nationale  da  18  octobre,  1866. 

2  Le  progres  des  impots  indirects,  qui  a  continue  en  1866,  est,  avec  le  progres 
du  commerce  exterieur,  une  preuve  que  la  situation,  conside'ree  dans  son  ensem¬ 
ble,  n’a  pas  empire  depuis  un  an,  malgre  la  langueur  des  affaires  dans  diverses 
industries. 

3  On  pre'tend  toutefois  qu’il  n’augmente  pas. 

6  6  juillet,  1863. 


4  7  mai,  1859. 
6  4  mai,  1864. 


288 


ECONOMIC  HISTORY. 


amortie  sous  la  Republique.  Le  nouveau  gouverneraent  la 
ranima.1  Les  capitaux  etaient  confiants.  On  en  profita  pour 
inaugurer  un  autre  mode  de  concession.  A  la  construction 
de  la  voie  par  EEtat,  on  substitua  la  construction  par  les 
compagnies  que  l’on  encouragea  par  une  longue  jouissance ; 
les  baux,  avec  les  nouvelles  compagnies  et  meme  avec  les 
anciennes,  furent  la  plupart  passes  ou  revises  pour  quatre- 
vingt-dix-neuf  ans.2  On  engageait  sans  doute  un  plus  loin- 
tain  avenir ;  mais  on  faisait  immediatement  peser  toute  la 
charge  sur  les  capitaux  appeles  a  recueillir  les  benefices  les 
plus  directs  de  l’entreprise ;  la  combinaison  etait  evidemment 
preferable.  Elle  n’eut  pas  ete  possible  dix  ans  plus  tdt. 

Les  concessions  multiples,  creant  des  int^rets  divers  et 
parfois  hostiles  sur  un  meme  parcours,  dtaient  un  obstacle  a 
la  circulation.  On  les  reunit,  de  maniere  a  former  de  vastes 
compagnies  qui  se  partagerent  le  domaine  du  reseau  fran§ais  : 
ce  ne  fut  pas  sans  quelques  tatonnements  qui  fournirent  des 
armes  a  la  speculation.3  Mais  dans  l’espace  de  la  premiere 
annde,  3,000  kilometres  trouvaient  des  concessionnaires ;  et, 
a  la  fin  de  la  quatrieme  annee,  sur  une  longueur  d’environ 
5,000  kilometres,  les  trains  circulaient. 

Les  grandes  arteres  dtaient  dessinees  et  allaient  se  terminer 
en  peu  d’anndes.  Le  gouvernement  resolut  hardiment  d’abor- 
der  la  construction  des  lignes  secondaires  et  de  faire  pdndtrer 
la  vie  commerciale  dans  tout  le  corps  de  la  nation,  comme  les 
petits  vaisseaux  font  pdndtrer  le  sang  jusque  dans  les  chairs 
de  1’homme.  Cette  fois,  le  profit  ne  semblait  pas  pouvoir  de 
longtemps  rdmundrer  la  ddpense  et  d’ailleurs  la  crise  de  1857 
avait  rendu  plus  timides  les  entreprises.  Le  gouvernement 
intervint,  et,  par  deux  lois  successives,4  donna  des  subventions 

1  Le  cliemin  de  ceinture  avait  ete  ecrete  des  le  11  decembre  1851.  Dans  la 
seule  annee  1852,  46  decrets  furent  rendus  relativement  aux  chemins  de  fer,  et 
267  kilom.  furent  livres  a  la  circulation. 

2  Les  concessions  etaient  faites  pour  99  ans,  avec  garantie,  pour  le  capital 
engage  par  les  Compagnies,  d’un  minimum  d’interet  de  4%  pendant  la  moitie  de 
ce  temps.  Quelques  concessions  furent  meme  faites  sans  garantie.  Cette  ga- 
rantie  fut  d’ailleurs  supprimee  pour  le  premier  reseau,  lorsque  la  loi  du  11  juin, 
1859,  accorda  une  garantie  particuliere  au  second  reseau. 

3  Decrets  du  17  janvier,  19  fevrier,  20,  27  mars,  1852. 

4  Lois  du  11  juin,  1859,  et  du  11  juin,  1863. 


FRANCE  SOUS  LE  SECOND  EMPIRE. 


289 


ou  ga  ran  tit  aux  capitaux  du  second  reseau,  lesquels  devaient 
etre  fournis  par  des  obligations,  un  interet  de  4  pour  100  et  l’a- 
mortissement  en  cinquante  ans. 

C’est  ainsi  qu’a  la  fin  de  l’ann^e  1866,  la  longueur  totals 
des  concessions  definitives  atteignait  21,050  kilom.,  et  celle' 
des  lignes  exploitees,  14,506 ;  la  depense  faite  s’elevait  a  pres 
de  7  milliards.1 

Les  canaux,  quoique  relegues  au  second  plan,  ont  6te  ter- 
mines  sur  plusieurs  points,  entrepris  sur  quelques  autres,2  et 
sont  rentes,  pour  la  plupart,  dans  le  domaine  de  l’Etat,3  qui 
s’est  empress^  d’abaisser  presque  partout  les  droits  au  niveau 
des  frais  d’entretien.  La  navigation  des  rivieres  a  ete  ame- 
lioree.4  Les  grandes  routes,  paralleles  aux  voies  de  fer,  se 
trouvaient  delaissecs  ;  mais  les  routes  transversales,  emportant 
ou  apportant  vojageurs  et  marchandises,  que  les  trains  re- 
cueillent  ou  sement  sur  leur  route,  s’animaient.5  On  a  en 
consequence  redouble  de  zele  dans  l’application  de  la  loi  de 
1836  sur  les  cliemins  vicinaux,6  et  une  loi  nouvelle  a  encou¬ 
rage  les  conseils  g&ieraux  aconstruire,  aux  meines  conditions, 
des  cliemins  de  fer,  qui,  a  Pexemple  de  ceux  de  l’Alsace,  for- 
meront  un  troisi^me  reseau.7 

La  teiegraphie  eiectrique,  qui  etait  a  ses  debuts  en  1851, 
a  commence  a  envelopper  de  son  reseau  la  France,  a  la  suite  du 


1  On  se  rappelle  qu’a  la  fin  du  regne  de  Louis-Philippe,  la  depense  effectuee 
etait  d’environ  1  milliard  et  le  nombre  de  kilometres  exploites  de  1830. 

2  La  France  possedait  4,200  kilom.  de  canaux  en  1848,  et,  en  1866,  4,500 ; 
de  plus,  6,900  kil.  de  rivieres  navigables.  De  grands  travaux  ont  ete  poursuivis. 
Yoir  Exp.  de  la  sit.  de  I’Emp.,  1867,  Mon.,  p.  450  et  451. 

3  Decret  du  janvier,  1852,  et  loi  du  28  juillet,  1860. 

4  Voir,  entre  autres,  la  loi  du  14  juillet,  1861. 

5  De  1848  a  1866  exclusivement,  l’Ltat  a  depense  pour  routes,  canaux, 
ponts,  phares,  etc.,  627  millions. 

6  Relativement  aux  chemins  de  fer,  routes,  canaux,  etc.  M.  P.  Boiteau. 
Voir  Fortune  publique  et  finances  de  la  France,  t.  I.  Le  chemins  vicinaux  ont 
coftte  en  1866,  120  millions,  dont  un  tiers  en  prestations,  en  nature. 

7  C’est  en  1859  et  1860  que  le  conseil  general  du  Bas-Rhin,  M.  Migneret 
etant  prefet,  classa  les  premiers  cliemins  de  ce  genre.  —  La  loi  rendue  sur  la 
mature  est  du  12  juillet,  1865.  Deux  departements  (Eure,  Saone  et  Loire),  inde- 
pendamment  du  Haut  et  du  Bas-Rhin  ont  deja  entrepris  des  chemins  de  ce 
genre.  29  autres  departements  ont  decide  en  principe  des  creations  du  meme 
genre. 


19 


290 


ECONOMIC  HISTORY. 


d£cret  du  6  janvier,  1852;  elle  couvre  aujourd’hui  l’Europe;1 
elle  fait  communiquer  les  deux  mondes  et  transmet,  en  France 
seulement,  pres  de  trois  millions  de  depeches  pour  le  compte 
des  particuliers.2  La  poste,  dont  le  service  a  regu  a  diverses 
reprises  de  notables  ameliorations,  transportait  trois  fois  plus 
de  lettres  ou  d’imprimes,  en  1865  qu’en  1847  ;3  de  nombreuses 
conventions  postales  et  des  conventions  monetaires  ont 
signees  avec  les  pays  voisins.4  Les  regions  lointaines  de  l’Asie 
et  de  l’Amerique  ont  6te  mises  en  relations  regulieres  avec 
nos  ports  par  la  Compagnie  des  messageries  imperiales,  qui 
s’est  habilement  transform^  devant  la  concurrence  des  che- 
mins  de  fer,  et  par  la  Compagnie  des  paquebots  transatlan- 
tiques  dont,  vingt  ans  auparavant,  un  ministre  aurait  ddja 
voulu  doter  la  France.5 

Les  homines,  leurs  pensees  et  leurs  produits  circulent  au¬ 
jourd’hui  en  beaucoup  plus  grande  nombre,6  avec  plus  de 
rapidite  et  a  moins  de  frais :  cette  mobility  qui  a  sensiblement 
modifie  l’^conomie  de  la  vie  privee,  et  qui  modihe  les  rapports 
des  nations,  restera  un  des  caracteres  distinctifs  de  la  seconde 
moitie  du  dix-neuvieme  siecle. 

Avec  de  pareilles  conditions,  le  commerce  extdrieur  ne 
pouvait  manquer  de  s’accroitre.  En  1850,  6poque  a  laquelle 

1  Grace  &  la  convention  telegraphique  du  17  mai,  1865,  “le  reseau  telegra¬ 
phique  du  continent  europeen  est  adjourd’hui,  dans  toutes  ses  parties  sans  excep¬ 
tion,  soumis  a  des  principes  et  a  des  regies  uniformes.”  Exp.  de  la  sit.  de  VEmp., 
1867. 

2  2,367,991  depeches  dans  les  10  premiers  mois  de  1866,  ce  qui  suppose  envi¬ 
ron  2,480,000  pour  l’annee.  Au  lcr  dec.,  1866,  il  y  avait  2,091  bureaux  telegra- 
phiques.  Des  lignes  souterraines  ont  ete  etablies  dans  quelques  grandes  villes 
et  des  tils  d’un  diametre  superieur  sur  les  principales  lignes  pour  prevenir  les 
interruptions  de  service. 

8  En  1847,  216  millions;  en  1865,  590  millions. 

4  La  convention  monetaire  du  23  dec.,  1865,  a  £tabli  une  monnaie  uniforme 
(mais  critiquable  a  certain  egard)  entre  la  France,  la  Belgique,  la  Suisse,  Tltalie, 
et  commence  a  constituer  ce  que  M.  de  Parieu  nomme  le  Miinzverein  latin. 

5  Plusieurs  autres  services  ont  ete  etablis,  Exp.  de  la  sit.  de  I’Emp.,  1867. 

6  Le  nombre  des  voyageurs  des  chemins  de  fer  e'tait  de  37  millions  en  1857, 
de  84‘ millions  en  1866.  Dans  cette  derniere  annee,  les  84  millions  de  voyageurs 
ont  fait  3,361  millions  de  kilometres,  et  34  millions  de  tonnes  ont  fait  5,171  mil¬ 
lions  de  kil.  Le  produit  brut  a  etc  de  184  millions  de  francs  pour  les  voyageurs 
et  de  314  millions  pour  les  marchandises.  Depuis  1855,  le  prix  moyen  kilome- 
trique  du  transport  de  la  tonne  a  baisse  de  0  fr.  a  1,117. 


FRANCE  SOUS  LE  SECOND  EMPIRE. 


291 


il  avait  a  peu  pres  retrouvd  le  niveau  de  l’ann^e  la  plus  pros- 
pere  du  regne  de  Louis-Philippe,  il  etait  de  2,555  millions. 
En  1864,  il  s’^levait  a  7,329  millions,  c’est-a-dire  qu’il  a  pres- 
que  triple  dans  l’espace  de  quinze  ans. 

Si  l’on  prend  la  moyenne  de  chacun  des  trois  lustres  qui 
composent  cette  periode,  on  constate,  non-seulement  un  pro¬ 
gres,  mais  une  progression  constante,  a  n’envisager  que  les 
marchandises  importees  ou  exportees  au  commerce  special. 
La  moyenne  de  1850-1854  est  de  2,294  millions ;  celle  de 
1855-1859,  de  3,626  millions,  et  celle  de  1860-1864,  periode 
pendant  laquelle  l’abaissement  des  tarifs  frangais  a  provoque 
la  concurrence  etrangere,  de  4,701  millions  et  le  progres 
continue.1 

Il  a  6t6  plus  rapide  qu’aux  deux  epoques  precedentes  de 
notre  histoire  contemporaine.  Durant  les  quinze  annees  de 
la  Restauration,  notre  commerce  ext^rieur  avait  a  peu  pres 
double  ;  durant  les  dix-sept  annees  du  regne  de  Louis-Phi¬ 
lippe,  il  avait  fait  un  peu  plus  que  doubler.2 

Ce  progres  tient  a  des  causes  generates  et  n’est  pas  un 
privilege  particulier  a  la  France.  Dans  les  etablissements 
de  credit  c’est  elle  qui  a  donnd  des  exemples  a  une  partie  de 
FEurope,  mais  elle  n’a  fait  que  suivre  a  distance  l’Angleterre ; 
dans  la  construction  des  chemins  de  fer,  elle  avait  6te  devan- 

s 

cee  par  plusieurs  Etats.  Cependant  aucune  nation,  la  Bel¬ 
gique  exceptee,3  n’a,  depuis  quinze  ans,  plus  largement  que 
la  France,  etendu  ses  relations  ext^rieures.  Pendant  qu’elle 

1  Ces  chiffres,  il  est  vrai,  sont  ceux  des  valeurs  actuelles,  c’est-a-dire  des  prix 
du  marche,  et,  comrae  la  valeur  de  l’argent  a  diminue,  ils  ne  represented  pas 
une  quantite  triple  de  marchandises.  L’annee  1865,  dont  on  ne  connait  encore 
que  le  commerce  special,  aproduit  5,981  millions,  l’annee-1866  produira  environ 
6,360  millions  (a  produit  5,308  millions  pour  les  10  premiers  mois) ;  le  com¬ 
merce  special  de  1864  etait  de  5,452  millions.  La  navigation  s’est  accrue 
comme  le  reste ;  12,  531,504  tonnes  en  1854 ;  17,638,900  tonnes  en  1866.  La 
principale  augmentation  a  ete  pour  les  ports  de  Marseille,  du  Havre,  et  de 
Bordeaux. 

2  En  1815  (tres-mauvaise  annee  d’ailleurs),  621  millions;  en  1830,  1,211  mil¬ 
lions;  en  1847,  2,437  millions. 

3  Belgique,  en  1835,  358  millions  de  francs,  et,  en  1847,  584 ;  en  1850,  618 
millions,  et,  en  1861,  2,432  millions ;  ce  qui  fait  environ  500  fr.  par  habitant. 
En  France,  la  proportion  n’est  pas  tout  h  fait  de  200  fr.  par  habitant.  Elle  est 
en  Angleterre  de  366  fr. 


292 


ECONOMIC  HISTORY. 


en  triplait  le  chiffre,  la  plupart  des  pays  commergants,  et 
l’Angleterre  en  particular,  doublaient  seulement  lc  leur ;  il 
est  juste  de  noter  toutefois  que  ce  doublement,  en  Angleterre, 
portait  son  chiffre  a  11  milliards.1 

II  reste  a  dire  quelles  lois  out  favorise  cette  extension  du 
commerce  et  regissent  aujourd’hui  le  travail. 

LES  TRAIT^S  DE  COMMERCE. 

Quelques  jours  apres  la  proclamation  de  l’Empire,  le  sdnav 
tus-consulte  du  25  decembre  1852  interpretait  et  etendait  les 
prerogatives  du  souverain  en  matiere  de  traites  de  commerce, 
en  declarant  qu’ils  auraient  “  force  de  loi  pour  les  modifica¬ 
tions  de  tarif  qui  y  sont  stipulees,”  c’est-a-dire  que  le  Corps 
legislatif  n’aurait  plus  le  droit  de  les  ratifier  ou  de  les  annuler 
par  son  vote.  Ce  pouvoir,  remis  au  chef  de  l’Etat,  pouvait, 
en  dehors  des  considerations  politiques,  inquieter  certains 
interets ;  le  president  du  Senat,  dans  son  rapport,  s’appliqua 
a  les  rassurer  en  se  pronongant  contre  les  theories  de  la  liberty 
commerciale. 

Cependant  la  r^colte  de  1858  fut  mauvaise.  L’importation 
seule  pouvait  combler  le  deficit.  Le  gouvernement,  pour  Ten- 
couragcr,  n’hdsita  pas  a  abaisser  toutes  les  barrieres  de  la 
douane ;  il  decr^ta  la  suspension  de  l’dchelle  mobile,2  l’exemp- 
tiou  du  droit  de  tonnage  et  de  la  surtaxe  de  pavilion  pour  les 
navi  res  charges  de  substances  alimentaires,3 1’abaissement  du 
droit  sur  les  bestiaux.4  Ce  n’^taient  que  des  mesures  tempo- 
raires ;  mais  elles  semblaient  indiquer  un  esprit  nouveau. 

1  En  1854  (premiere  annee  oil  la  statistique  ait  donne  les  valeurs),  268  millions 
de  livres  sterling,  et,  en  1864,  435  millions  (soit  environ  10  milliards,  900  mil¬ 
lions).  En  1830,  une  statistique  anglaise  (voir  les  Annales  du  commerce  exterieur) 
donnait  120  millions :  il  y  aurait  done  eu  a  peu  pres  doublement  de  1830  a,  1850. 
Pays-Bas,  en  1832,  471  millions  de  francs;  en  1850,  1,079;  en  1864,  1,904. 
Russie,  en  1850,  192  millions  de  roubles ;  en  1863,  306  millions.  £tats-Unis,  en 
1831,  environ  184  millions  de  dollars  ;  en  1851,  412  millions  en  1860,  762 
millions. 

2  Decret  du  18  aout,  1853.  Cette  reforme  etait  alors  demandee  par  le  conseil 
municipal  de  Marseille  et  par  le  conseil  gene'ral  de  l’llerault  que  presidait  M. 
Michel  Chevalier. 

8  Dec.  du  8  aoftt,  1853. 

4  Dec.  du  14  septembre,  1853.  —  Les  droits  sur  boeufs  et  taureaux  etaient 
reduits  de  50  fr.  a  3  fr. 


FRANCE  SOUS  LE  SECOND  EMPIRE. 


293 


Dans  les  deux  camps  opposes  on  s’emut.  M.  Jean  Dollfus 
entreprit  une  campagne  contre  la  prohibition  des  fils  de  coton. 
Le  debat  fut  port6  successivement  devant  la  Soci^te  indus- 
trielle  de  Mulhouse,  devant  le  Conseil  superieur  du  commerce, 
et  dans  le  cabinet  de  l’Empereur :  M.  Dollfus  attaqua,  M.M. 
Feray  d’Essonne  et  Seilliere  defcndirent  le  systeme  protecteur. 
Le  tarif  des  cotons  lie  subit  qu’une  modification  leg£re ; 1  mais 
deja  un  decret,  plus  significatif,  changeait  les  zones  d’entr^e 
pour  la  houille  et  diminuait,  de  moitid  environ,  le  droit  sur 
les  fers.2  Deux  ans  apres,  nouvelle  reduction,  et,  comme  con¬ 
sequence,  abaissement  du  droit  sur  le  fer-blanc,  le  fil  de  fer,  la 
vieille  ferraille,  et  les  machines.3*  L’annee  1855  6tait  marquee, 
en  outre,  par  le  retranchement  de  pres  de  200  articles  sans 
importance,  tels  que  les  yeux  d’dcrevisse  ou  le  gui  de  chene, 
qui  allongeaient  le  tarif  sans  profit  pour  le  Tresor,4  et  par 
une  diminution  importante  du  droit  sur  les  laines  et  les  peaux 
brutes.5  La  tendance  du  gouvernement  s’accusait  avec  plus 
de  nettetd 

L’Exposition  universelle  de  Paris  venait  d’avoir  lieu  et  l’in- 
dustrie  frangaise  y  avait  brille  au  premier  rang  parmi  les 
nations.  Dans  le  but  d’epargner  aux  exposants  etrangers  la 
la  couteuse  necessity  de  remporter  leurs  produits,  et  peut-etre 
aussi  de  tenter  une  experience,  le  prince  Napoleon,  president 
de  la  Commission,  avait  fait  decider  que  tous  les  objets  ex¬ 
poses,  qu’ils  fussent  prohibes  ou  non,  pourraient  £tre  vendus 
et  admis  exceptionnellement  en  France  en  payant  un  droit  de 
22  p.  100.6  Or,  sur  un  total  d’environ  22  millions  de  richesses 
dtrang£res,  qui  avaient  6t6,  pendant  plusieurs  mois,  etalees 
sous  les  yeux  d’un  public  si  nombreux,  2  millions  |  seulement 
avaient  trouv6  des  acheteurs  frangais.7  L’industrie  frangaise 
n’etait  done  pas  aussi  incapable  de  lutter  contre  la  concur¬ 
rence  du  dehors  que  le  proclamaient  les  parties  int6ress6es. 

1  Voir  le  decret  du  28  decembre,  1853. 

2  Dec.  du  22  novembre,  1853.  —  La  diminution  sur  l’acier  fondu  etait  merae 
beaucoup  plus  forte  :  de  132  fr.  a  3  fr. 

3  Dec.  du  septembre,  1855.  '  4  Dec.  du  16  juillet,  1855. 

5  Dec.  du  17  janvier  et  du  10  decembre,  1855. 

6  Dec.  du  6  avril,  1854. 

1  Voir  Journ.  des  Econ.,  2e  serie,  t.  xi.  p.  471. 


294 


ECONOMIC  HISTORY. 


44  L’observation  qui  m’a  frapp6  tout  d’abord,”  disait  le  prince 
Napoleon  dans  son  rapport,  44  c’est  que  de  ces  grands  concours 
jaillit  une  fois  de  plus  la  preuve  que  les  soci6t6s  modernes 
marchent  vers  la  liberte.”  Deja  le  gouvernement,  desireux  de 
developper  “  les  relations  internationales  qui  pr^parent  le 
pr ogres  de  la  civilisation,”  avait  presente  au  Corps  legislatif 
44  un  projet  levant  toutes  les  prohibitions.”  Pour  la  premiere 
fois  peut-etre,  il  avait  rencontr^  une  resistance  qui  l’avait 
d’autant  plus  etonne  qu’elle  etait  plus  rare  et  qu’elle  cherchait 
a  prendre  son  point  d’appui,  hors  de  l’assemblee,  dans  l’agita- 
tion  des  villes  manufacturieres.  II  retira  le  projet,  en  annon- 
^ant  qu’une  nouvelle  loi  etait  mise  a  l’etude,  et  que  la  lev^e 
des  prohibitions  n’aurait  lieu  qu’a  partir  du  ler  juillet,  1861. 
44  L’industrie  frangaise,  prevenue  des  intentions  bien  arretdes 
du  gouvernement,  ajoutait  le  Moniteur ,  aura  tout  le  temps 
n^cessaire  pour  se  preparer  a  un  nouveau  regime  commercial.1 

Durant  trois  ans,  le  silence  se  fit  sur  cette  grave  question.2 
D’ailleurs  vers  la  fin  de  185T,  une  crise  terrible  avait  desar- 
§onne  la  speculation  et  fait  momentanement  refluer  en  baisse  le 
prix,  sans  cesse  montant  depuis  1852,  des  denrees,  des  matieres 
premieres,  et,  par  suite,  des  objets  manufactures ;  la  reprise  dcs 
travaux  avait  ete  suspendue  en  1859  par  la  guerre  d’ltalie. 

Le  commerce  commengait  a  peine  a  retrouver  son  £quilibre, 
lorsque,  le  15  janvier  1860,  le  Moniteur  publia  la  lettre  que 
l’Empereur  avait,  quelques  jours  auparavant,  ecrite  a  son 
ministre  des  finances.3  C’etait  un  vaste  programme  dcono- 
mique  dont  le  but  etait  u  d’imprimer  un  grand  essor  aux  di- 
verses  branches  de  la  richesse  nationale,”  et  que  son  auteur 
r^sumait  en  ces  termes  :  — 

44  Suppression  des  droits  sur  la  laine  et  les  cotons  ; 

44  Reduction  successive  sur  les  sucres  et  les  cafes ; 

44  Amelioration  dnergiquement  poursuivie  des  voies  de  com¬ 
munication. 

“  Reduction  des  droits  sur  les  canaux,  et,  par  suite,  abaisse- 
ment  g£n6ral  des  frais  de  transport ; 

1  Moniteur  du  17  octobre,  1856. 

2  Cependant  plusieurs  decrets  importants  furent  rendus. 

8  Lettre  du  5  janvier,  1860. 


FRANCE  SOUS  LE  SECOND  EMPIRE. 


295 


44  Prets  k  1’ agriculture  et  a  l’industrie  ; 

44  Suppression  des  prohibitions  ; 

44  Traite  de  commerce  avec  les  puissances  ^trangeres.” 

“  Par  ces  mesures,”  ajoutait  l’Empereur,  44  l’agriculture 
trouvera  l’^coulement  de  ses  produits ;  l’industrie,  affranchie 
d’entraves  exterieures,  aidee  par  le  gouvernement,  stimulee 
par  la  concurrence,  luttera  avantageusement  avec  les  produits 
etrangers,  et  notre  commerce,  au  lieu  de  languir,  prendra  un 
nouvel  essor.” 

La  pensee  du  gouvernement,  sur  ce  point,  se  relevait  tout 
entiere.  II  £tait  Impossible  qu’issu  du  suffrage  universel  et 
degage  des  liens  qui  avaient  arrete  ses  predecesseurs,  il  con¬ 
sents  a  maintenir  dans  son  integrity  le  systeme  prohibitif  que 
les  gouvernements  precedents  eux-memes  n’avaient  cree  ou  con¬ 
serve  aussi  rigoureux  que  par  la  necessite  de  compter  avec  de 
puissantes  influences ;  mais  il  eut  pu  se  faire  qu’un  autre  sou- 
verain  embrassat  moins  resol ument  un  moins  vaste  ensemble. 
Quoi  qiril  en  soit,  depuis  le  ddcret  de  Berlin,  aucun  fait 
aussi  considerable  ne  s’6tait  produit  dans  l’histoire  de  notre 
legislation  douaniere. 

Deja  etaient  arretes  les  articles  du  plus  important  traite  de 
commerce  que  put  signer  la  France,  de  celui  qui  devait  la  lier 
a  sa  rivale  la  plus  redoutee.  Le  lmros  de  la  ligue  anglaise, 
Richard  Cobden,  et  M.  Michel  Chevalier,  qui,  depuis  1852, 
faisait  a  cliaque  session  du  Conseil  general  de  PHerault,  voter 
un  manifeste  en  faveur  de  la  liberty  commerciale,  en  avaient 
eu  les  premiers  la  pensee,  et  avaient  trouve  des  disposi¬ 
tions  favorables  dans  le  ministere  anglais  et  a  la  cour 
des  Tuileries.  Au  lendemain  de  la  paix  de  Yillafranca  et  a 
la  veille  du  traite  de  Turin,  l’Empereur,  desireux  de  serrer 
les  nceuds  pacifiques  de  la  France  et  de  l’Angleterre,  approuva 
un  projet  qui  repondait  aux  besoins  de  sa  politique  exterieure 
comme  a  ses  vues  de  reformes  economiques,  et  des  la  fin  de 
novembre,  1859,  les  negociations  preliminaires,  conduites  avec 
le  plus  grand  secret  par  M.  Rouher,  ministre  du  commerce,  et 
par  les  deux  dconomistes,  Etaient  termindes.  Ce  fut  par  la 
lettre  du  5  janvier  que  la  France  apprit  qu’elle  entrait  dans 
une  nouvelle  ere  industrielle.  Le  23  du  meme  mois,  le  traite 
dtait  signd. 


296 


ECONOMIC  HISTORY. 


Lcs  prohibitions  dtaient  supprimdes.  Les  marchandises 
anglaises  entreraicnt  en  France  en  payant  un  droit  ad  valorem , 
qui  serait  bientot  converti  en  droit  sp^citique,  et  qui  n’excdde- 
rait  pas  30  pour  100  au  debut,  25  pour  100  a  partir  de  l’anndc 
1864.  La  Grande-Bretagne,  de  son  cotd,  admettait  en  pleine 
franchise  nos  produfts,  qui  payaient  encore  pour  la  plupart  un 
droit  de  10  pour  100,  et  ne  prelevait  plus  qu’une  taxe  variable 
de  1  a  2  scliellings  sur  nos  vins,  et  de  8  schellings  5  pence  sur 
nos  eaux-de-vie.1 

Le  traite  du  23  janvier  dtait  un  type  sur  lequel  on  se  propo¬ 
sal  de  reformer  toute  notre  legislation  douaniere,  et  de  rdgler 
les  rapports  commerciaux  de  la  France  avec  ses  voisins.  Des 
negociations  furent  presque  aussitot  entamdes  ;  elles  ont 
amcne  la  conclusion  de  plusieurs  traitds,  d’abord,  avec  la 
Belgique,2  puis  avec  la  Prusse  et  le  Zollverein,3  puis  avec 
l’ltalie  et  la  Suisse,4' enfin,  en  1865  et  1866,  avec  les  Pays-Bas, 
les  villes  hansdatiques,  le  Mecklembourg,  la  Suede,  l’Espagne, 
le  Portugal,  le  Perou,  l’Autriche.5 

Le  Corps  legislatif  ne  fut  saisi  de  ces  reformes  qu’apres  le 
fait  accompli.6  Cet  usage  des  droits  conferds  au  souverain 
par  le  senatus-consulte  du  25-30  decembre,  1852,  eut  le  regret¬ 
table  effet  de  donner  a  une  transformation  liberate  l’apparence 
d’un  coup  d’Etat  commercial,  et  preta  aux  partisans  de  la 
protection  leur  plus  solide  argument.  Le  gouvernemcnt  tint 
bon.  Dans  les  discussions  successives  qu’ont  amenees  les 
traites,  il  s’esfc  applique  constamment  a  £tablir  des  droits  de 
plus  en  plus  mod6r6s,  afin  de  rendre  toujours  plus  faciles  les 
relations  internationales,7  et  quoique  la  politique  ait  rendu 

1  Le  traite  portait  8  sell.  2  pence;  mais  le  taux  fut  trouve  insuffisant  en 
Angleterre  et  porte  a  8  sell.  5  p.  par  un  art.  addit.  du  20  fevrier. 

2  10  mai,  1861. 

3  24  mars  et  2  aout,  1862,  10  mai,  1865. 

4  17  janvier,  1864,  et  30  juin,  1864. 

6  7  juin,  1865,  11  mars,  1865,  9  juin,  1865,  4  et  30  juin,  18  juin,  1865,  11  juil- 
let,  1866;  2  dec.,  11  dec.,  1866.  Voir  M.  Boiteau,  Les  TraitSs  de  commerce  et 
Expos /  de  la  sit.  de  V Empire.  (}fon.  de  janv.,  1866  et  de  fev.  1867.) 

6  La  discussion  sur  les  modifications  de  tarif  du  traite  du  23  janvier  ne 
recoramen9a  au  Corps  legislatif  que  le  28  avril. 

7  Ainsi,  par  exemple,  les  moderations  de  droits  porttfes  dans  le  traite  avec 
l’ltalie,  ont  et£,  par  de'eret  du  20  janvier,  1864,  appliquees  a  la  Belgique  et  a 
l’Angleterre. 


FRANCE  SOUS  LE  SECOND  EMPIRE .  29T 

\  m 

vaine  durant  plusieurs  amides  la  Convention  avecle  Zollverein, 
la  France  communique  aujourd’hui  avec  toutes  les  nations 
limitrophes  de  son  territoire,  sans  rencontrer  1’obstacle  iusur- 
montable  de  la  prohibition,  et  sans  avoir,  dans  la  majority 
des  cas,  a  payer  autre  chose  qu’un  simple  droit  de  consomma- 
tion,  assez  leger  en  fait,  et  legitime  en  principe. 

Ces  traites  avaient  fait  disparaitre  les  prohibitions.  Le 
systeme  protecteur  qu’elles  etayaient,  et  dans  lequel  de  si 
larges  breches  etaient  ouvertes,  devait  necessairement  crou- 
ler.  II  ne  restait  au  Corps  legislatif  qu’a  deblayer  le  ter¬ 
rain  et  a  rdtablir  1’harmonie  dans  les  diverses  parties  de 
notre  Code  douanier,  en  votant  les  projets  que  lui  presentait 
le  gouvernement.  .  .  . 


298 


ECONOMIC  HISTORY. 


XII. 

* 

RECENT  CHANGES  IN  TRANSPORTATION  AND 

PRODUCTION. 

From  Wells’  Recent  Economic  Changes,  pp.  27-65. 

WHEN  the  historian  of  the  future  writes  the  history  of 
the  nineteenth  century  he  will  doubtless  assign  to  the 
period  embraced  by  the  life  of  the  generation  terminating  in 
1885  a  place  of  importance,  considered  in  its  relations  to  the 
interests  of  humanity,  second  to  but  very  few,  and  perhaps  to 
none,  of  the  many  similar  epochs  of  time  in  any  of  the  centu¬ 
ries  that  have  preceded  it;  inasmuch  as  all  economists  who 
have  specially  studied  this  matter  are  substantially  agreed  that, 
within  the  period  named,  man  in  general  has  attained  to  such 
a  greater  control  over  the  forces  of  Nature,  and  has  so  com¬ 
passed  their  use,  that  he  has  been  able  to  do  far  more  work  in 
a  given  time,  produce  far  more  product  measured  by  quantity 
in  ratio  to  a  given  amount  of  labor,  and  reduce  the  effort  nec¬ 
essary  to  insure  a  comfortable  subsistence  in  a  far  greater 
measure  than  it  was  possible  for  him  to  accomplish  in  any 
previous  generation.  In  the  absence  of  sufficiently  complete 
data,  it  is  not  easy,  and  perhaps  not  possible,  to  estimate  accu¬ 
rately,  and  specifically  state  the  average  saving  in  time  and 
labor  in  the  world’s  work  of  production  and  distribution 
that  has  been  thus  achieved.  In  a  few  departments  of  indus¬ 
trial  effort  the  saving  in  both  of  these  factors  has  certainly 
amounted  to  seventy  or  eighty  per  cent ;  in  not  a  few  to  more 
than  fifty  per  cent.1  Mr.  Edward  Atkinson,  who  has  made 

1  According  to  the  United  States  Bureau  of  Labor  (report  for  1886),  the 
gain  in  the  power  of  production  in  some  of  the  leading  industries  of  the  United 
States  “  during  the  past  fifteen  or  twenty  years,”  as  measured  by  the  displace¬ 
ment  of  the  muscular  labor  formerly  employed  to  effect  a  given  result  (i.  e. 


CHANGES  IN  TRANSPORTATION . 


299 


this  matter  a  special  study,  considers  one  third  as  the  mini¬ 
mum  average  that  can  be  accepted  for  the  period  above  speci¬ 
fied.1  Other  authorities  are  inclined  to  assign  a  considerably 
higher  average.  The  deductions  of  Mr.  William  Fowler,  Fel¬ 
low  of  University  College,  London,  are  to  the  effect  that  the 
saving  of  labor  since  1850  in  the  production  of  any  given  arti¬ 
cle  amounts  to  forty  per  cent ; 2  and  the  British  Royal  Com¬ 
mission  (minority  report,  1886)  characterizes  the  amount  of 
labor  required  to  accomplish  a  given  amount  of  production 
and  transport  at  the  present  time  as  incomparably  less  than 
was  requisite  forty  years  ago,  and  as  u  being  constantly 
reduced.” 

But  be  this  as  it  may,  out  of  such  results  as  are  definitely 
known  and  accepted  have  come  tremendous  industrial  and 
social  disturbances,  the  extent  and  effect  of  which  —  and 
more  especially  of  the  disturbances  which  have  culminated, 

amount  of  product)  has  been  as  follows  :  In  the  manufacture  of  agricultural 
implements,  from  fifty  to  seventy  per  cent;  in  the  manufacture  of  shoes, 
eighty  per  cent;  in  the  manufacture  of  carriages,  sixty-five  per  cent;  in  the 
manufacture  of  machines  and  machinery,  forty  per  cent ;  in  the  silk-manufac¬ 
ture,  fifty  per  cent ;  and  so  on. 

1  In  a  print-cloth  factory  in  New  England,  in  which  the  conditions  of  pro¬ 
duction  were  analyzed  by  Mr.  Atkinson,  the  product  per  hand  was  found  by 
him  to  have  advanced  from  26,531  yards,  representing  3,382  hours’  work  in 
1871,  to  32,391  yards,  representing  2,695  hours’  work,  in  1884,  —  an  increase  of 
twenty-two  per  cent  in  product,  and  a  decrease  of  twenty  per  cent  in  hours  of 
labor.  Converted  into  cloth  of  their  own  product,  the  wages  of  the  operatives 
in  this  same  mill  would  have  yielded  them  6,205  yards  in  1871,  as  compared 
with  9,737  yards  in  1884,  —  an  increase  of  56t9q2o  per  cent.  During  the  same 
period  of  years  the  prices  of  beef,  pork,  flour,  oats,  butter,  lard,  cheese,  and 
wool  in  the  United  States  declined  more  than  twenty-five  per  cent. 

A  like  investigation  by  the  same  authority  of  an  iron-furnace  in  Pennsyl¬ 
vania  showed  that,  comparing  the  results  of  the  five  years  from  1860  to  1864 
with  the  five  years  from  1875  to  1879,  the  product  per  hand  advanced  from  776 
tons  to  1,219  tons ;  that  the  gross  value  of  the  product  remained  about  the 
same ;  that  the  number  of  hands  was  reduced  from  seventy-six  to  seventy-one ; 
and  that  consumers  gained  a  benefit  of  reduction  in  price  from  $27.95  per  ton 
to  $19.08. 

2  Wages  have  greatly  increased,  but  the  cost  of  doing  a  given  amount  of 
work  has  greatly  decreased,  so  that  five  men  can  now  do  the  work  which 
would  have  demanded  the  labor  of  eight  men  in  1850.  If  this  be  correct,  the 
saving  of  labor  is  forty  per  cent  in  producing  any  given  article.  —  Appreciation 
of  Gold,  William  Fowler,  Fellow  of  University  College,  London,  1886. 


800 


ECONOMIC  HISTORY. 


as  it  were,  in  later  years  —  it  is  not  easy  to  appreciate  with¬ 
out  the  presentation  and  consideration  of  certain  typical  and 
specific  examples.  To  a  selection  of  such  examples,  out  of  a 
large  number  that  are  available,  attention  is  accordingly  next 
invited. 

Let  us  go  back,  in  the  first  instance,  to  the  year  1869,  when 
an  event  occurred  which  was  probably  productive  of  more  im¬ 
mediate  and  serious  economic  changes  —  industrial,  commer¬ 
cial,  and  financial  —  than  any  other  event  of  this  century,  a 
period  of  extensive  war  excepted.  That  was  the  opening  of 
the  Suez  Canal.  Before  that  time,  and  since  the  discovery  by 
Yasco  da  Gama,  in  1498,  of  the  route  to  India  by  the  Cape  of 
Good  Hope,  all  the  trade  of  the  Western  hemispheres  with  the 
Indies  and  the  East  toiled  slowly  and  uncertainly  around  the 
Cape,  at  an  expenditure  in  time  of  from  six  to  eight  months 
for  the  round  voyage.  The  contingencies  attendant  upon  such 
lengthened  voyages  and  service,  as  the  possible  interruption 
of  commerce  by  war,  or  failure  of  crops  in  remote  countries, 
which  could  not  easily  be  anticipated,  required  that  vast  stores 
of  Indian  and  Chinese  products  should  be  always  kept  on  hand 
at  the  one  spot  in  Europe  where  the  consumers  of  such  com¬ 
modities  could  speedily  supply  themselves  with  any  article  they 
required ;  and  that  spot,  by  reason  of  geographical  position 
and  commercial  advantage,  was  England.  Out  of  this  condi¬ 
tion  of  affairs  came  naturally  a  vast  system  of  warehousing 
in  and  distribution  from  England,  and  of  British  banking  and 
exchange.  Then  came  the  opening  of  the  canal.  What  were 
the  results  ?  The  old  transportation  had  been  performed  by 
ships,  mainly  sailing-vessels,  fitted  to  go  round  the  Cape,  and, 
as  such  ships  were  not  adapted  to  the  Suez  Canal,  an  amount 
of  tonnage,  estimated  by  some  authorities  as  high  as  two  mil¬ 
lion  tons,  and  representing  an  immense  amount  of  wealth, 
was  virtually  destroyed.1  The  voyage,  in  place  of  occupying 

1  “The  canal  may  therefore  be  said  to  have  given  a  death-blow  to  sailing- 
vessels,  except  for  a  few  special  purposes.”  —  From  a  paper  by  Charles  Mag- 
niac,  indorsed  by  the  “  London  Economist  ”  as  a  merchant  of  eminence  and 
experience,  entitled  to  speak  with  authority,  read  before  the  Indian  Section  of 
the  London  Society  of  Arts,  February,  1876. 


CHANGES  IN  TRANSPORTATION. 


301 


from  six  to  eight  months,  has  been  so  greatly  reduced  that 
steamers  adapted  to  the  canal  now  make  the  voyage  from 
London  to  Calcutta,  or  vice  versa,  in  less  than  thirty  days. 
The  notable  destruction  or  great  impairment  in  the  value  of 
ships  consequent  upon  the  construction  of  the  canal  did  not, 
furthermore,  terminate  with  its  immediate  opening  and  use  ; 
for  improvements  in  marine  engines,  diminishing  the  con¬ 
sumption  of  coal,  and  so  enabling  vessels  to  be  not  only  sailed 
at  less  cost,  but  to  carry  also  more  cargo,  were,  in  consequence 
of  demand  for  quick  and  cheap  service,  so  rapidly  effected 
that  the  numerous  and  expensive  steamer  constructions  of 
1870-73,  being  unable  to  compete  with  the  constructions  of 
the  next  two  years,  were  nearly  all  displaced  in  1875-76, 
and  sold  for  half,  or  less  than  half,  of  their  original  cost. 
And  within  another  decade  these  same  improved  steamers 
of  1875-76  have,  in  turn,  been  discarded  and  sold  at  small 
prices,  as  unfit  for  the  service  of  lines  having  an  established 
trade,  and  replaced  with  vessels  fitted  with  the  triple-expansion 
engines,  and  saving  nearly  fifty  per  cent  in  the  consumption 
of  fuel.  And  now  a  quadruple-expansion  ”  engines  are  begin¬ 
ning  to  be  introduced,  and  their  tendency  to  supplant  the 
“  triple  expansion  ”  is  “  unmistakable.” 

In  all  commercial  history,  probably  no  more  striking  illus¬ 
tration  can  be  found  of  the  economic  principle  that  nothing 
marks  more  clearly  the  rate  of  material  progress  than  the 
rapidity  with  which  that  which  is  old  and  has  been  considered 
wealth  is  destroyed  by  the  results  of  new  inventions  and 
discoveries.1 

Again,  with  the  reduction  of  the  time  of  the  voyage  to  the 
East  by  the  Suez  Canal  to  thirty  days  or  less,  and  with  tele¬ 
graphic  communication  between  India  and  China  and  the 
markets  of  the  Western  world,  permitting  the  dealers  and 
consumers  of  the  latter  to  adjust  to  a  nicety  their  supplies 

1  In  the  last  analysis  it  will  appear  that  there  is  no  such  thing  as  fixed 
capital ;  there  is  nothing  useful  that  is  very  old  except  the  precious  metals, 
and  all  life  consists  in  the  conversion  of  forces.  The  only  capital  which  is  of 
permanent  value  is  immaterial,  —  the  experience  of  generations  and  the  devel¬ 
opment  of  science.  —  Edward  Atkinson. 


302 


ECONOMIC  HISTORY. 


of  commodities  to  varying  demands,  there  was  no  longer  any 
necessity  of  laying  up  great  stores  of  Eastern  commodities  in 
Europe  ;  and  with  the  termination  of  this  necessity,  the  India 
warehouse  and  distribution  system  of  England,  with  all  the 
labor  and  all  the  capital  and  banking  incident  to  it,  substan¬ 
tially  passed  away.  Europe,  and  to  some  extent  the  United 
States,  ceased  to  go  to  England  for  its  supplies.  If  Austria 
wants  anything  of  Indian  product,  it  stops  en  route ,  by  the 
Suez  Canal,  at  Trieste;  if  Italy,  at  Venice  or  Genoa;  if 
France,  at  Marseilles  ;  if  Spain,  at  Cadiz.  How  great  has 
been  the  disturbance  thus  occasioned  in  British  trade  is  shown 
by  the  following  figures :  In  1871  the  total  exports  of  India 
wrere  £57,556,000,  of  which  £30,737,000  went  to  the  United 
Kingdom  ;  but  in  1885,  on  a  total  Indian  export  of  £85,087,000, 
the  United  Kingdom  received  only  £31,882,000.  During  the 
same  time  the  relative  loss  on  British  expgrts  to  India  was 
less  than  a  million  and  a  half  sterling. 

As  a  rule,  also,  stocks  of  Indian  produce  are  now  kept,  not 
only  in  the  countries,  but  at  the  very  localities  of  their  pro¬ 
duction,  and  are  there  drawn  upon  as  they  are  wanted  for  im¬ 
mediate  consumption,  with  a  greatly  reduced  employment  of 
the  former  numerous  and  expensive  intermediate  agencies.1 
Thus  a  Calcutta  merchant  or  commission  agent  at  any  of  .the 
world’s  great  centres  of  commerce  contracts  through  a  clerk 
and  the  telegraph  with  a  manufacturer  in  any  country  —  it 
may  be  half  round  the  globe  removed  —  to  sell  him  jute,  cot¬ 
ton,  hides,  spices,  cutch,  linseed,  or  other  like  Indian  produce. 
An  inevitable  steamer  is  sure  to  be  in  an  Eastern  port,  ready 

1  In  illustration  of  this  curious  point,  attention  is  asked  to  the  following 
extract  from  a  review  of  the  trade  of  British  India,  for  the  year  1886,  from  the 
“Times,”  of  India,  published  at  Bombay:  “What  the  mercantile  commu¬ 
nity” —  i.  e.,  of  Bombay  —  “has  suffered  and  is  suffering  from,  is  the  very  nar¬ 
row  margin  which  now  exists  between  the  producer  and  consumer.  Twenty 
years  ago  the  large  importing  houses  held  stocks,  but  nowadays  nearly  every¬ 
thing  is  sold  to  arrive,  or  bought  in  execution  of  native  orders,  and  the  bazaar 
dealers,  instead  of  European  importers,  have  become  the  holders  of  stocks. 
The  cable  and  canal  have  to  answer  for  the  transformation;  while  the  ease 
with  which  funds  can  be  secured  at  home  by  individuals  absolutely  destitute 
of  all  knowledge  of  the  trade,  and  minus  the  capital  to  work  it,  has  resulted  in 
the  diminution  of  profits  both  to  importers  and  to  bazaar  dealers.” 


CHANGES  IN  TRANSPORTATION. 


303 


to  sail  upon  short  notice ;  the  merchandise  wanted  is  bought 
bj  telegraph,  hurried  on  board  the  ship,  and  the  agent  draws 
for  the  price  agreed  upon,  through  some  bank,  with  the  ship¬ 
ping  documents.  In  four  weeks,  in  the  case  of  England,  and 
a  lesser  time  for  countries  intermediate,  the  shipment  arrives  ; 
the  manufacturer  pays  the  bill,  either  with  his  own  money  or 
his  banker’s;  and,  before  another  week  is  out,  the  cotton  and 
the  jute  are  going  through  the  factory;  the  linseed  has  been 
converted  into  oil,  and  the  hides  in  the  tannery  are  being 
transformed  into  leather. 

Importations  of  East  Indian  produce  are  also  no  longer  con¬ 
fined  in  England  and  other  countries  to  a  special  class  of 
merchants ;  and  so  generally  has  this  former  large  and 
special  department  of  trade  been  broken  up  and  dispersed 
that  extensive  retail  grocers  in  the  larger  cities  of  Europe  and 
the  United  States  are  now  reported  as  drawing  their  supplies 
direct  from  native  dealers  in  both  China  and  India. 

Another  curious  and  recent  result  of  the  Suez  Canal  con¬ 
struction,  operating  in  a  quarter  and  upon  an  industry  that 
could  not  well  have  been  anticipated,  has  been  its  effect  on  an 
important  department  of  Italian  agriculture,  —  namely,  the 
culture  of  rice.  This  cereal  has  for  many  years  been  a  staple 
crop  of  Italy,  'and  a  leading  article  of  Italian  export,  —  the 
total  export  for  the  year  1881  having  amounted  to  83,598 
tons,  or  167,196,000  pounds.  Since  the  year  1878,  however, 
rice  grown  in  Burmah,  and  other  parts  of  the  far  East,  has 
been  imported  into  Italy  and  other  countries  of  Southern 
Europe  in  such  enormous  and  continually  increasing  quanti¬ 
ties,  and  at  such  rates,  as  to  excite  great  apprehensions  among 
the  growers  of  Italian  rice,  and  largely  diminish  its  exporta¬ 
tion, —  the  imports  of  Eastern  rice  into  Italy  alone  having 
increased  from  11,957  tons  in  1878  to  58,095  tons  in  1887. 
For  France,  Italy,  and  other  Mediterranean  ports  east,  the 
importation  of  rice  from  Southern  Asia  (mainly  from  Burmah) 
was  152,147  tons  in  1887,  as  compared  with  about  20,000 
tons  in  1878. 

That  the  same  causes  are  also  exerting  a  like  influence  upon 
the  marketing  of  the  cereal  crops  of  the  United  States  is 


304 


ECONOMIC  HISTORY. 


shown  by  the  circumstance  that  the  freight  rates  on  the  trans¬ 
port  of  grain  from  Bombay  to  England,  by  way  of  the  Suez 
Canal,  declined  from  32.5  cents  per  bushel  in  1880,  to  16.2 
cents  in  1885  ;  and,  to  the  extent  of  this  decline,  the  ability  of 
the  Indian  ryot  to  compete  with  the  American  grain-grower, 
in  the  markets  of  Europe,  was  increased. 

How  great  was  the  disturbance  occasioned  in  the  general 
prices  of  the  commodities  that  make  up  Eastern  commerce  by 
the  opening  of  the  Suez  Canal,  and  how  quickly  prices  re¬ 
sponded  to  the  introduction  of  improvements  in  distribution, 
is  illustrated  by  the  following  experience  :  The  value  of  the 
total  trade  of  India  with  foreign  countries,  exclusive  of  its 
coasting-trade,  was  estimated,  at  the  time  of  the  opening  of 
the  canal  in  1869,  at  £105,500,000  ($527,500,000).  In  1874, 
however,  the  value  was  estimated  at  only  £95,500,000,  or  at 
a  reduction  of  ten  per  cent ;  and  the  inference  might  naturally 
have  been  that  such  a  large  reduction  as  ten  millions  sterling 
($50,000,000)  in  five  years,  with  a  concurrent’ increase  in  the 
world’s  population,  could  only  indicate  a  reduction  of  quanti¬ 
ties.  But  that  such  was  not  the  case  was  shown  by  the  fact 
that  250,000  tons  more  shipping  (mainly  steam,  and  there¬ 
fore  equivalent  to  at  least  500,000  more  tons  of  sail)  was  em¬ 
ployed  in  transporting  commodities  between  India  and  foreign 
countries  in  1874  than  in  1869 ;  or,  that  while  the  value  of 
the  trade,  through  a  reduction  of  prices  had  notably  declined 
during  this  period,  the  quantities  entering  into  trade  had  so 
greatly  increased  during  the  same  time  that  250,000  tons 
more  shipping  were  required  to  convey  it. 

In  short,  the  construction  of  the  Suez  Canal  completely 
revolutionized  one  of  the  greatest  departments  of  the  world’s 
commerce  and  business  ;  absolutely  destroying  an  immense 
amount  of  what  had  previously  been  wealth,  and  displacing  or 
changing  the  employment  of  millions  of  capital  and  thousands 
of  men ;  or,  as  the  London  “  Economist  ”  has  expressed  it, 
“  so  altered  and  so  twisted  many  of  the  existing  modes  and 
channels  of  business  as  to  create  mischief  and  confusion  ”  to 
an  extent  sufficient  to  constitute  one  great  general  cause 
for  a  universal  commercial  and  industrial  depression  and 
disturbance. 


CHANGES  IN  TRANSPORTATION. 


805 


The  deductions  from  the  most  recent  tonnage  statistics  of 
Great  Britain  come  properly  next  in  order  for  consideration. 
During  the  ten  years  from  1870  to  1880,  inclusive,  the  British 
mercantile  marine  increased  its  movement,  in  the  matter  of 
foreign  entries  and  clearances  alone,  to  the  extent  of  22,000,- 
000  tons  ;  or,  to  put  it  more  simply,  the  British  mercantile 
marine  exclusively  engaged  in  foreign  trade  did  so  much  more 
work  within  the  period  named  ;  and  yet  the  number  of  men 
who  were  employed  in  effecting  this  great  movement  had  de¬ 
creased  in  1880,  as  compared  with  1870,  to  the  extent  of  about 
three  thousand  (2,990  exactly).  What  did  it  ?  The  intro¬ 
duction  of  steam-hoisting  machines  and  grain-elevators  upon 
the  wharves  and  docks,  and  the  employment  of  steam-power 
upon  the  vessels  for  steering,  raising  the  sails  and  anchors, 
pumping,  and  discharging  the  cargo  ;  or,  in  other  words,  the 
ability,  through  the  increased  use  of  steam  and  improved  ma¬ 
chinery,  to  carry  larger  cargoes  in  a  shorter  time,  with  no 
increase  —  or,  rather,  an  actual  decrease  —  of  the  number  of 
men  employed  in  sailing  or  managing  the  vessels. 

Statistical  investigations  of  a  later  date  furnish  even  more 
striking  illustrations  to  the  same  effect  from  this  industrial 
specialty.  Thus,  for  1870,  the  number  of  hands  (exclusive  of 
masters)  employed  to  every  one  thousand  tons  capacity,  en¬ 
tered  or  cleared  of  the  British  steam  mercantile  marine,  is 
reported  to  have  been  forty-seven,  but  in  1885  it  was  only 
27.7 ;  or  seventy  per  cent  more  manual  labor  was  required  in 
1870  than  in  1885  to  do  the  same  work.  In  sailing-vessels 
the  change,  owing  to  a  lesser  degree  of  improvement  in  the 
details  of  navigation,  has  been  naturally  smaller,  but  never¬ 
theless  considerable  ;  twenty-seven  hands  being  required  in 
1885  as  against  thirty-five  in  1870  for  the  same  tonnage  en¬ 
tered  or  cleared.1  Another  fact  of  interest  is,  that  the  recent 
increase  in  the  proportion  of  large  vessels  constructed  has  so 

1  The  official  statistics  do  not  show  in  the  British  mercantile  marine  whether 
the  economy  of  labor  which  was  effected  prior  to  1886  has  continued  to  be  pro¬ 
gressive;  inasmuch  as  the  totals  for  1886-88  include  Lascars  and  Asiatics 
under  Asiatic  articles  of  agreement ;  allowing  for  this,  however,  the  proportion 
of  men  employed  to  every  one  thousand  tons  of  shipping  was  considerably 
smaller  in  the  years  1886-87  than  in  1884-85. 

20 


806 


ECONOMIC  HISTORY . 


greatly  increased  the  efficiency  of  shipping,  and  so  cheapened 
the  cost  of  sea-carriage,  to  the  advantage  of  both  producers 
and  consumers,  that  much  business  that  was  before  impossible 
has  become  quite  possible.  Of  the  total  British  tonnage  con¬ 
structed  in  1870,  only  six  per  cent  was  of  vessels  in  excess  of 
two  thousand  tons  burden ;  but  in  1884  fully  seventeen  per 
cent  was  of  vessels  of  that  size,  or  larger.  Meanwhile,  the 
cost  of  new  iron  (or  steel)  ships  has  been  greatly  reduced ; 
from  |90  per  ton  in  1872-74  to  $65  in  1877,  $57  in  1880, 
while  in  1887  first-class  freighting  screw-steamers,  constructed 
of  steel,  fitted  with  triple  compound  engines,  with  largely 
increased  carrying  capacity  (in  comparison  with  former  iron 
construction)  and  consequent  earning  power,  and  capable  of 
being  worked  at  less  expense,  could  have  been  furnished  for 
$83.95  per  ton.1 

1  The  following  is  a  copy  of  a  circular  issued  in  October,  1887,  by  the  rep¬ 
resentatives  in  New  York  of  a  well-known  iron-ship-building  firm  at  Newcastle- 
on-Tyne,  England :  — 

“Inviting  your  attention  to  the  inclosed  particulars  of  two  steel  screw 
freight  steamers  building  to  our  order,  by  the  well-known  builders,  Messrs. 
- ,  of  Newcastle-on-Tyne,  we  beg  to  give  you  some  additional  details : 

“The  contract  price  is  £34,250  each,  which  is  just  about  £G  17s.  (six  pounds 
seventeen  shillings  sterling)  a  ton  dead-weight  capacity,  and  including  all  ex¬ 
penses  up  to  time  of  delivery,  will  not  exceed  £7  a  ton  dead  weight,  or  at 
present  rate  of  exchange,  $33.95  American  money. 

“  Thus  it  will  be  seen  that  as  regards  the  cost  of  these  vessels,  while  of  large 
carrying  capacity  and  consequent  earning  power,  and  fitted  as  they  will  be  with 
engines  of  the  newest  type  and  with  all  modern  appliances  which  have  been 
tried  and  found  conducive  to  quick  and  economical  working  (while  avoiding  all 
innovations  of  an  experimental  character),  the  present  price  of  not  over  £7  per 
ton,  dead-weight  capacity,  as  against  £12  to  £13  a  few  years  ago,  renders  the 
difference  in  values  relatively  even  greater  than  appears  at  first  sight.” 

A  brief  examination  of  what  is  embraced  in  the  construction  of  these  vessels 
is  not  a  little  interesting  and  instructive,  especially  to  those  who  recall  what 
was  deemed  but  a  comparatively  few  years  ago  the  very  best  conditions  for 
ocean  steam  navigation  :  Triple-expansion  engines  —  three  cylinders  —  of  the 
latest  and  most  approved  type.  Horse-power,  1,700.  Propeller  shifting  blades 
and  spare  set;  each  part  of  engines  interchangeable.  Two  double-ended  steel 
boilers,  in  the  corrugated  furnaces,  to  work  at  one  hundred  and  fifty  pounds 
pressure.  Four  steam  winches  of  most  approved  pattern  and  large  power. 
Steam  steering-gear  forward,  and  powerful  hand-gear  aft.  Patent  stockless 
anchors,  working  direct  into  hawser  pipes,  effecting  great  saving  in  time,  labor, 
and  gear.  Water-ballast  in  double. bottom.  Lighthouses  on  forecastle.  Decks 
of  steel  throughout ;  height,  seven  feet,  nine  inches,  being  the  suitable  height 


CHANGES  IN  TRANSPORTATION. 


807 


Prior  to  about  the  year  1875  ocean  steamships  had  not  been 
formidable  as  freight-carriers.  The  marine  engine  was  too 
(heavy,  occupied  too  much  space,  consumed  too  much  coal. 
For  transportation  of  passengers,  and  of  freight  having  large 
value  in  small  space,  they  were  satisfactory ;  but  for  perform¬ 
ing  a  general  carrying-trade  of  the  heavy  and  bulky  articles 
of  commerce  they  were  not  satisfactory.  A  steamer  of  the 
old  kind,  capable  of  carrying  three  thousand  tons,  might  sail 
on-  a  voyage  so  long  that  she  would  be  compelled  to  carry 
twenty-two  hundred  tons  of  coal,  leaving  room  for  only  eight 
hundred  tons  of  freight;  whereas,  at  the  present  time,  a 
steamer  with  the  compound  engines  and  all  other  modern 
improvements  can  make  the  same  voyage  and  practically 
reverse  the  figures,  —  that  is,  carry  twenty-two  hundred  tons 
of  freight  with  a  consumption  of  only  eight  hundred  tons  of 
coal.  The  result  of  the  construction  and  use  of  compound 
engines  in  economizing  coal  has  been  illustrated  by  Sir  Lyon 
Playfair  by  the  statement  that  “  a  small  cake  of  coal,  which 
would  pass  through  a  ring  the  size  of  a  shilling  when  burned 
in  the  compound  engine  of  a  modern  steamboat  would  drive  a 
ton  of  food  and  its  proportion  of  the  ship  two  miles  on  its  way 
from  a  foreign  port.”  Another  calculator,  says  -the  London 
“  Engineer,”  has  computed  that  half  a  sheet  of  note-paper  will 
develop  sufficient  power,  when  burned  in  connection  with  the 
triple-expansion  engine,  to  carry  a  ton  a  mile  in  an  Atlantic 
steamer.  How,  under  such  circumstances,  the  charge  for  sea- 
freights  on  articles  of  comparatively  high  value  has  been  re¬ 
duced,  is  shown  by  the  fact  that  the  ocean  transport  of  fresh 
meats  from  New  York  to  Liverpool  does  not  exceed  one  cent 
Qc?.)  per  pound ;  and  including  commissions,  insurance,  and 
all  other  items  of  charge,  does  not  exceed  two  cents  (lc?.)  per 

for  passengers,  horses  and  cattle.  Ventilation  of  holds  specially  provided 
through  automatic  exhaustion  by  means  of  the  funnel.  Hatches  of  large 
dimensions  capable  of  taking  in  locomotives  or  other  large  pieces  of  machinery. 
Six  steel  bulkheads,  with  longitudinal  bulkheads  throughout  holds  and  between 
decks.  Coal  consumption  twenty-two  tons  per  day.  Coal-bunkers  sufficient 
for  forty  days’  steaming;  outfit  in  sails,  steel  hawsers,  oil  and  water  tanks,  load¬ 
ing  and  discharging  gear,  cutlery,  plate,  china,  and  glass,  and  optician’s  stores  — 
all  of  the  best  makers  and  full  supply. 


308 


ECONOMIC  HISTORY. 


pound.  Boxed  meats  have  also  been  carried  from  Chicago  to 
London  as  a  regular  business  for  fifty  cents  per  100  pounds. 
In  1860  6<Y  (twelve  cents)  per  bushel  was  about  the  lowest 
rate  charged  for  any  length  of  time  for  the  transportation  of 
bulk  grain  from  New  York  to  Liverpool,  and  for  a  part  of  that 
year  the  rate  ran  up  as  high  at  13J<L  (twenty-seven  cents)  per 
bushel.  But  for  the  year  1886  the  average  rate  for  the  same 
service  was  2 \d.  (five  cents)  per  bushel ;  while  in  April,  1888, 
the  rate  on  grain  from  New  York  to  Liverpool  by  steam  de¬ 
clined  to  as  low  a  figure  as  \d,  per  bushel  of  sixty  pounds  ; 
| d.  to  Antwerp,  and  \d .  to  Glasgow.  It  seems  almost  need¬ 
less  to  add  that  these  rates  were  much  below  the  actual  cost 
of  carriage.  In  like  manner,  the  cost  of  the  ocean  transpor¬ 
tation  of  tea  from  China  and  Japan,  or  sugar  from  Cuba, 
or  coffee  from  Brazil,  has  been  greatly  reduced  by  the  same 
causes. 

The  above  are  examples  on  a  large  scale  of  the  disturbing 
influence  of  the  recent  application  of  steam  to  maritime  in¬ 
dustries.  The  following  is  an  example  drawn  from  compara¬ 
tively  one  of  the  smallest  of  the  world’s  industries,  prosecuted 
in  one  of  the  most  out-of-the-way  places  :  The  seal-fishery  is  a 
most  important  industrial  occupation  and  source  of  subsis¬ 
tence  to  the  poor  and  scant  population  of  Newfoundland. 
Originally  it  was  prosecuted  in  small  sailing-vessels,  and  up¬ 
ward  of  a  hundred  of  such  craft,  employing  a  large  number  of 
men,  annually  left  the  port  of  St.  John’s  for  the  seal-hunt. 
Now  few  or  no  sailing-vessels  engage  in  the  business ;  steam¬ 
ers  have  been  substituted,  and  the  same  number  of  seals  are 
taken  with  half  the  number  of  men  that  were  formerly  needed. 
The  consequence  is,  a  diminished  opportunity  for  a  population 
of  few  resources,  and  to  obtain  “  a  berth  for  the  ice,”  as  it  is 
termed,  is  considered  as  a  favor. 

Is  it,  therefore,  to  be  wondered  at  that  the  sailing-vessel  is 
fast  disappearing  from  the  ocean  ; 1  that  good  authorities  esti- 

1  The  statistics  of  the  world’s  shipping  show  that  in  1885  there  were  25,706 
sailing-vessels,  of  11,216,618  tons;  in  1886  there  were  25,155,  of  10,411,807  tons; 
and  in  1887  there  were  23,310,  of  9,820,492.  The  decrease  in  two  years  was 
therefore,  1,396,123,  or  12.4  per  cent. 


CHANGES  IN  TRANSPORTATION. 


309 


mated  in  1886  tliat  the  tonnage  then  afloat  was  about  twenty- 
five  per  cent  in  excess  of  all  that  was  needed  to  do  the  then 
carrying-trade  of  the  world  ;  and  that  ship-owners  everywhere 
were  unanimously  of  the  opinion  that  the  depression  of  indus¬ 
try  was  universal  ? 

[During  the  year  1888,  from  causes  that  must  be  regarded  as 
exceptional  (and  which  will  be  hereafter  noticed),  an  increased 
demand  for  shipping  accommodation  suddenly  sprang  up,  and 
which,  not  being  readily  supplied,  was  followed  by  an  almost  con¬ 
tinued  advance  in  freight  rates,  until  in  many  directions  —  i.  e., 
in  the  Russian  grain  and  Eastern  trade  —  the  rise  was  equal  to  one 
hundred  per  cent  advance  upon  the  rates  current  in  1887  and  the 
early  months  of  1888.  This  condition  of  affairs  in  turn  gave  a 
great  impulse  to  ship-building,  especially  in  Great  Britain,  where 
the  construction  for  1888  amounted  to  903,687  tons,  as  against 
637, 000  in  1887 ;  an  extent  of  annual  increase  that,  except  in  two 
instances,  has  never  been  exceeded.  The  additional  tonnage  thus 
supplied  proving  in  excess  of  the  world’s  demand,  the  advance  in 
freights  in  1888  was  in  a  great  measure  lost  in  the  first  six  months 
of  1889.] 

Great,  however,  as  has  been  the  revolution  in  respect  to 
economy  and  efficiency  in  the  carrying-trade  upon  the  ocean, 
the  revolution  in  the  carrying-trade  upon  land  during  the  same 
period  has  been  even  greater  and  more  remarkable.  Taking 
the  American  railroads  in  general  as  representative  of  the  rail¬ 
road  system  of  the  world,  the  average  charge  for  moving  one 
ton  of  freight  per  mile  has  been  reduced  from  about  2.5  cents 
in  1869  to  1.06  in  1887 ;  or,  taking  the  results  on  one  of  the 
.  standard  roads  of  the  United  States  (the  New  York  Central), 
from  1.95  in  1869  to  0.68  in  1885. 1  To  grasp  fully  the  mean¬ 
ing  and  significance  of  these  figures,  their  method  of  presen¬ 
tation  may  be  varied  by  saying  that  two  thousand  pounds  of 
coal,  iron,  wheat,  cotton,  or  other  commodities,  can  now  be 

1  On  certain  of  the  railroads  of  the  United  States  an  even  lower  average 
rate  of  freight  has  been  reported.  Thus,  for  the  year  1886  the  Michigan  Cen¬ 
tral  Railroad  reported  0.56  cent  as  their  average  rate  per  ton  per  mile  for  that 
year,  and  the  Lake  Shore  and  Michigan  Southern  Railroad  0.55  cent  for  like 
service. 


310 


ECONOMIC  HISTORY. 


carried  on  the  best  managed  railways  for  a  distance  of  one 
mile  for  a  sum  so  small  that  outside  of  China  it  would  be 
difficult  to  find  a  coin  of  equivalent  value  to  give  to  a  boy  as  a 
reward  for  carrying  an  ounce  package  across  a  street,  even  if 
a  man  or  boy  could  be  found  in  Europe  or  the  United  States 
willing  to  give  or  accept  so  small  a  compensation  for  such  a 
service. 

The  following  ingenious  method  of  illustrating  the  same  re¬ 
sults  has  been  also  suggested  :  The  number  of  miles  of  rail¬ 
road  in  operation  in  various  parts  of  the  world  in  1885  was 
probably  about  300, 000. 1  Reckoning  their  capacity  for  trans¬ 
portation  at  a  rate  not  greater  than  the  results  actually 
achieved  in  that  same  year  in  the  United  States,  it  would 
appear  that  the  aggregate  railroad  system  of  the  world  could 
easily  have  performed  work  in  1885  equivalent  to  transporting 
120,000,000,000  tons  one  mile.  “  But  if  it  is  next  considered 
that  it  is  a  fair  day’s  work  for  an  ordinary  horse  to  haul  a 
ton  6.7  miles,  year  in  and  year  out,  it  further  appears  that  the 
railways  have  added  to  the  power  of  the  human  race,  for  the 
satisfaction  of  its  desires  by  the  cheapening  of  products,  a 
force  somewhat  greater  than  that  of  a  horse  working  twelve 
days  yearly  for  every  inhabitant  of  the  globe.” 

In  the  year  1887  the  freight-transportation  by  the  railroads 
of  the  United  States  (according  to  Poor’s  “  Manual  ”)  was 
equivalent  to  60,061,069,996  tons  carried  one  mile  ;  while  the 
population  for  that  year  was  somewhat  in  excess  of  60,000,000. 
The  railroad  freight  service  of  the  United  States  for  1887  was 
therefore  equivalent  to  carrying  a  thousand  tons  one  mile  for 
every  person,  or  every  ton  a  thousand  miles.  The  average 
cost  of  this  service  was  about  $10  per  annum  for  every  person. 
But  if  it  had  been  entirely  performed  by  horse-power,  even 
under  the  most  favorable  of  old-time  conditions,  its  cost  would 
have  been  about  $200  to  each  inhabitant,  which  in  turn  would 
represent  an  expenditure  greater  than  the  entire  value  of  the 
then  annual  product  of  the  country ;  or,  in  other  words,  all 

1  The  world’s  railway  mileage  for  January,  1889,  was  probably  in  excess  of 
370,000  miles.  At  the  same  date  the  telegraph  system  of  the  world  comprised 
at  least  1,000,000  miles  of  length  of  line. 


CHANGES  IN  TRANSPORTATION. 


311 


that  the  people  of  the  United  States  earned  in  188T  would  not 
pay  the  cost  of  transportation  alone  of  the  amount  of  such 
service  rendered  in  that  year,  had  it  been  performed  by  horse¬ 
power  exclusively.1 

Less  than  half  a  century  ago,  the  railroad  was  practically 
unknown.2  It  is,  therefore,  within  that  short  period  that  this 
enormous  power  has  been  placed  at  the  disposal  of  every  in¬ 
habitant  of  the  globe  for  the  cheapening  of  transportation  to 
him  of  the  products  of  other  people  and  countries,  and  for 
enabling  him  to  market  or  exchange  to  better  advantage  the 
results  of  his  own  labor  or  services.  As  the  extension  of 
the  railway  system  has,  however,  not  been  equal  in  all  parts 
of  the  world  —  less  than  thirty  thousand  miles  existing,  at 
the  close  of  1887,  in  Asia,  Africa,  and  Australia  combined  — 
its  accruing  benefits  have  not,  of  course,  been  equal.  And 
while  all  the  inhabitants  of  the  globe  have  undoubtedly  been 
profited  in  a  degree,  by  far  the  greater  part  of  the  enormous 
additions  that  have  been  made  to  the  world’s  working  force 
through  the  railroad  since  1840,  have  accrued  to  the  benefit 
of  the  people  of  the  United  States,  and  of  Europe,  —  exclusive 
of  Russia,  Turkey,  and  the  former  Turkish  provinces  of  south¬ 
eastern  Europe,  —  a  number  not  much  exceeding  two  hundred 
millions,  or  not  a  quarter  part  of  the  entire  population  of  the 
globe.  The  result  of  this  economic  change  has  therefore 
been  to  broaden  and  deepen  rather  than  diminish  the  line 
of  separation  between  the  civilized  and  the  semi-civilized  and 
barbarous  nations. 

Now,  while  a  multiplicity  of  inventions  and  of  experiences 
have  contributed  to  the  attainment  of  such  results  under  this 
railroad  system  of  transportation,  the  discovery  of  a  method 

1  One  further  interesting  corollary  of  this  exhibit  is  that  the  average  return, 
in  the  form  of  interest  and  dividends,  on  the  enormous  amount  of  capital  which 
lias  been  actually  expended  in  order  that  the  present  railway  service  in  the 
United  States  may  be  performed,  cannot  be  estimated  as  in  excess  of  four  per 
cent  per  annum  as  a  maximum. 

2  As  late  as  1840  there  were  in  operation  only  about  2,860  miles  of  railway 
in  America,  and  2,130  in  Europe,  or  a  total  of  4,990  miles.  For  practical  pur¬ 
poses,  it  may  therefore  be  said  that  the  world’s  railway  system  did  not  then 
exist ;  while  its  organization  and  correspondence  for  doing  full  and  efficient 
work  must  be  referred  to  a  much  later  period. 


812 


ECONOMIC  HISTORY. 


of  making  steel  cheap  was  the  one  thing  which  was  absolutely 
essential  to  make  them  finally  possible  ;  inasmuch  as  the  cost 
of  frequently  replacing  rails  of  iron  would  have  entailed  such 
a  burden  of  expenditure  as  to  have  rendered  the  present 
cheapness  of  railway  transportation  utterly  unattainable. 
Note,  therefore,  how  rapidly  improvements  in  processes  have 
followed  the  discovery  of  Bessemer,  until,  on  the  score  of  rel¬ 
ative  first  cost  alone,  it  has  become  economical  to  substitute 
steel  for  iron  in  railroad  construction.  In  1873  Bessemer 
steel  in  England,  where  its  price  has  not  been  enhanced  by 
protective  duties,  commanded  $80  per  ton  ;  in  1886  it  was 
profitably  manufactured  and  sold  in  the  same  country  for  less 
than  $20  per  ton  I1  Within  the  same  time  the  annual  pro¬ 
ducing  capacity  of  a  Bessemer  converter  lias  been  increased 
fourfold,  with  no  increase  but  rather  a  diminution  of  the  in¬ 
volved  labor ;  and,  by  the  Gilchrist-Thomas  process,  four  men 
can  now  make  a  given  product  of  steel  in  the  same  time  and 
with  less  cost  of  material  than  it  took  ten  men  ten  years  ago 
to  accomplish.  A  ton  of  steel  rails  can  now  also  be  made 
with  five  thousand  pounds  of  coal,  as  compared  with  ten 
thousand  pounds  in  1868. 

“The  importance  of  the  Bessemer  invention  of  steel  can  be  best 
understood  by  looking  at  tlie  world’s  production  of  that  metal  in 
1887.  The  production  of  Bessemer  steel  in  tlie  eight  chief  iron 
and  steel  producing  countries  of  the  world  amounted  in  that  year 
to  7,269,767  tons,  as  compared  with  6,034,115  tons  in  1886,  show¬ 
ing  an  increase  of  1,260,094  tons,  or  twenty  per  cent.  The  sav¬ 
ing  effected  by  railway  companies  by  the  use  of  Bessemer  metal 
and  the  additional  security  gained  thereby  is  shown  by  the  fact 
that  a  locomotive  on  the  Great  Northern  Bailway  has  accom- 

1  The  average  price  of  iron  rails  in  Great  Britain  for  the  year  1883  was  £5 
per  ton ;  steel  rails  in  the  same  market  sold  in  18G6  for  £4  5s.  per  ton  ;  and  in 
1887  sales  of  steel  rails  were  made  in  Belgium  for  £3  16s.  (§18.75)  per  ton,  de¬ 
liverable  at  the  works.  The  average  price  of  steel  rails  in  Pennsylvania  (U.  S.) 
at  the  works,  for  1886,  with  a  tariff  on  imports  of  §17  per  ton,  was  $34^  per 
ton.  Since  the  beginning  of  1883  the  manufacture  of  iron  rails  in  the  United 
States  has  been  almost  entirely  discontinued,  and  during  the  years  from  1883 
to  1888  there  were  virtually  no  market  quotations  for  them.  The  last  recorded 
average  price  for  iron  rails  was  §45£  per  ton  in  1882. 


CHANGES  IN  TRANSPORTATION. 


313 


plished,  with  a  moderate  train-load  of  passenger  coaches,  a  statute 
mile  in  fifty  seconds,  or  at  the  rate  of  seventy-two  miles  per  hour, 
and  makes  a  considerable  continuous  run  at  a  speed  of  one  mile  per 
minute,  — a  rate  of  railway  travelling  almost  beyond  the  dreams  or 
anticipations  of  the  renowned  George  Stephenson.’7  The  use  of 
steel  in  place  of  iron  in  ship-construction  may  he  said  to  date  from 
1878,  and  the  rapidity  with  which  the  former  has  replaced  the  lat¬ 
ter  metal  is  very  remarkable.  Thus,  in  1878  u  the  percentage  of 
steel  used  in  the  construction  of  steamships  in  Great  Britain  was 
only  1*09  hut  in  1887  the  percentage  of  iron  used  in  proportion  to 
steel  was  only  0-93;  or,  in  other  words,  in  1878  there  was  ninety 
times  as  much  iron  as  steel  used  for  steamers,  hut  in  1887  there 
was  more  than  eight  times  the  quantity  of  steel  used  as  compared 
with  iron  for  the  same  purpose,  and,  as  regards  sailing-ships,  the 
quantity  of  steel  used  in  1887  amounted  to  practically  one  half 
that  of  iron.” — Address  of  the  President  ( Mr .  Adamson )  of  the 
British  Iron  and  Steel  Association ,  May ,  1888. 

The  application  and  use  of  steam  alone  up  to  date  (1889) 
has  accordingly  more  than  trebled  man’s  working  power,  and 
by  enabling  him  to  economize  his  physical  strength  has  given 
him  greater  leisure,  comfort,  and  abundance,  and  also  greater 
opportunity  for  that  mental  training  which  is  essential  to  a 
higher  development.  And  yet  it  is  certain  that  four  fifths  of 
the  steam-engines  now  working  in  the  world  have  been  con- 
structed  during  the  last  quarter  of  a  century,  or  since  1865. 

One  of  the  most  momentous  and  what  may  be  called  human¬ 
itarian  results  of  the  recent  great  extension  and  cheapening 
of  the  world’s  railway  system  and  service  is  that  there  is 
now  no  longer  any  occasion  for  the  people  of  any  country 
indulging  in  either  excessive  hopes  or  fears  as  to  the  results 
of  any  particular  harvest ;  inasmuch  as  the  failure  of  crops 
in  any  one  country  is  no  longer,  as  it  was,  no  later  than 
twenty  years  ago,  identical  with  high  prices  of  grain ;  the 
prices  of  cereals  being  at  present  regulated,  not  within  any 
particular  country,  but  by  the  combined  production  and  con¬ 
sumption  of  all  countries  made  mutually  accessible  by  rail¬ 
roads  and  steamships.  As  a  matter  of  fact,  indeed,  the 
granaries  for  no  small  portion  of  the  surplus  stock  of  the 


314 


ECONOMIC  HISTORY. 


world's  cereals  are  at  the  present  time  ships  and  railroad- 
cars  in  the  process  of  movement  to  the  points  of  greatest 
demand  for  consumption.  Hence  it  is  that,  since  18T0,  years 
of  locally  bad  crops  in  Europe  have  generally  witnessed  con¬ 
siderably  lower  prices  than  years  when  the  local  crops  were 
good,  and  there  was  a  local  surplus  for  export.1 

In  short,  one  marked  effect  of  the  present  railroad  and 
steamship  system  of  transportation  has  been  to  compel  a  uni¬ 
formity  of  prices  for  all  commodities  that  are  essential  to  life, 
and  to  put  an  end  forever  to  what,  less  than  half  a  century 
ago,  was  a  constant  feature  of  European  commercial  experi¬ 
ence,  namely,  the  existence  of  local  markets,  with  widely 
divergent  prices  for  such  commodities. 

How  much  of  misery  and  starvation  a  locally  deficient  har¬ 
vest  entailed  under  the  old  system  upon  the  poorer  classes, 
through  the  absence  of  opportunity  of  supplying  the  deficiency 
through  importations  from  other  countries  and  even  from 
contiguous  districts,  is  shown  by  the  circumstance  that  in  the 
English  Parliamentary  debates  upon  the  corn  laws,  about  the 
year  1840,  it  was  estimated  upon  data  furnished  by  Mr.  Tooke, 
in  his  “  History  of  Prices,”  that  a  deficiency  of  one-sixth  in 
the  English  harvest  resulted  in  a  rise  of  at  least  one  hundred 
per  cent  in  the  price  of  grain;  and  another  estimate  by 


1  A  century  ago  every  nation  of  Europe  raised  in  ordinary  years  enough 
grain  to  supply  the  needs  of  its  own  population,  and  the  circulation  of  food 
from  country  to  country,  and  from  province  to  province,  was  restricted  and 
even  generally  prohibited.  After  the  middle  of  the  eighteenth  century  there 
were  indications  that  the  domestic  growth  of  wheat  in  England  was  falling 
below  the  consumption  of  the  people ;  but  this  unpleasant  fact  was  studiously 
concealed  —  by  the  enormously  expensive  corn  laws,  which  on  the  one  hand 
artificially  stimulated  agriculture  and  kept  poor  lands  in  cultivation,  and,  on 
the  other,  restricted  through  high  prices  the  consumption  of  bread  —  and  was 
not  openly  recognized  for  nearly  half  a  century  later.  Subsequently  the  other 
nations  of  Europe,  with  the  exception  of  Russia  and  Austria-Hungary,  have 
experienced  the  same  alteration  in  their  food-producing  capacity  —  in  part  due 
to  natural  influences,  and  in  part  to  artificial  factors  —  which  have  turned  the 
attention  of  the  people  away  from  the  cultivation  of  cereals  into  employments 
that  promised  to  be  more  profitable ;  and  they  have  found  it  cheaper  to  import 
food  than  to  grow  it  themselves.  So  that  there  are  now  no  countries  in  Europe 
save  the  two  above  mentioned  that  have  a  surplus  product  of  wheat  available 
for  export. 


CHANGES  IN  TRANSPORTATION. 


315 


Davenant  and  King,  for  the  close  of  the  seventeenth  century, 
corroborates  this  apparently  excessive  statement.  The  esti¬ 
mate  of  these  latter  authorities  was  as  follows :  — 


For  a  deficit 
equal  to  — 

1-10  . 

2-10  , 

3- 10  . 

4- 10  , 

5- 10  . 


There  will  be  a 
rise  in  price  of — 

.  3-10 

.  8-10 
.  16-10 
.  28-10 
.  45-10 


As  late  as  1817  the  difference  in  France  between  the  highest 
and  the  lowest  prices  of  grain  in  different  parts  of  the  country 
was  45  francs  per  hectolitre.  In  1847  the  average  difference 
was  26  francs.  Since  1870  the  greatest  difference  at  any 
time  has  not  been  in  excess  of  3.55  francs.  The  following 
table,  given  on  German  authority,  and  representing  the  price 
(in  silver  gulden  per  hectolitre)  of  grain  for  various  pe¬ 
riods,  exhibits  a  like  progress  of  price  equalization  between 
nations  :  — 


Period. 

England. 

France. 

Belgium. 

Prussia. 

1821-’30 . 

10  25 

735 

644 

5-65 

1831-’40 . 

9  60 

7-61 

7  31 

5-27 

1841-’50 . 

9-15 

7  89 

7-99 

6-41 

i85i-’eo . 

9-40 

7-84 

965 

8-07 

1861-70  ....... 

8-80 

8-59 

924 

779 

For  grain  henceforth,  therefore,  the  railroad  and  the  steam¬ 
ship  have  decided  that  there  shall  be  but  one  market  —  the 
world ;  and  that  the  margin  for  speculation  in  this  commodity, 
so  essential  to  the  well-being  of  humanity,  shall  he  restricted 
to  very  narrow  limits  ;  the  speculator  for  a  rise  in  wheat  in 
any  one  country  finding  himself  practically  in  competition 
with  all  wheat-producing  countries  the  moment  he  undertakes 
to  advance  prices ;  while  abnormal  values  in  one  country  or 
market,  or  excessive  reserves  at  one  centre  or  another,  are 
certain  to  be  speedily  neutralized  and  controlled  by  the 
influence  of  all  countries  and  markets. 


316 


ECONOMIC  HISTORY. 


The  movement  and  prices  of  wheat  for  the  year  1888  fur¬ 
nish  a  most  remarkable  illustration  and  confirmation  of  the 
above  statements,  and  also  (as  Sir  James  Caird  has  pointed 
out)  “  of  the  smoothness  (at  the  present  time)  of  the  opera¬ 
tions  of  trade  under  natural  conditions.”  During  the  eleven 
months  of  1888,  ending  November  30th,  Great  Britain  im¬ 
ported  a  little  more  than  sixty-seven  million  hundred-weight 
of  wheat  and  flour.  In  the  corresponding  eleven  months  of 
1887  the  foreign  supply  was  practically  the  same.  There 
was,  however,  a  very  great  change  in  the  sources  of  supply. 
Thus,  in  1887,  North  and  South  America  furnished  forty-nine 
million  hundred-weight  out  of  the  sixty-seven  million  hundred¬ 
weight  that  Great  Britain  required ;  but  in  1888  the  harvests 
of  America  were  comparatively  meagre,  and  supplied  Great 
Britain  with  but  tiventy-nine  million  hundred-weight,  leaving 
a  deficiency  of  twenty  millions  to  be  obtained  from  other 
sources.  Eastern  Europe,  and  especially  Russia,  which  were 
favored  during  the  year  1888  with  splendid  weather  and  enor¬ 
mous  crops,  were  able  to  promptly  make  good  the  missing 
twenty  millions  ;  but  the  market  changes  and  vicissitudes  of 
trade  consequent  on  such  an  extensive  transfer  of  the  British 
supplies  of  wheat  were  something  extraordinary.  Twenty 
years  ago,  had  Russia  in  any  one  year  harvested  a  surplus  of 
wheat  as  large  as  she  did  in  1888,  such  surplus,  through  an 
inability  to  cheaply  and  promptly  move  it  to  a  market,  would 
have  been  not  only  of  little  monetary  value  to  the  producer, 
but  would  probably  by  its  unsalable  presence  in  the  country 
have  considerably  lowered  the  market  price  of  so  much  of  the 
crop  as  was  required  for  home  consumption.  Under  existing 
conditions,  however,  great  gain  accrued  to  the  Russian  farmer 
and  to  all  the  interests  and  nationalities  employed  in  the 
movements  of  his  product.  A  demand  for  shipping  for  this 
special  trade,  which  could  not  at  once  be  fully  supplied,  also 
occasioned  a  quick  advance  in  ocean  freights  in  all  quarters 
of  the  globe,  in  some  instances  to  the  extent  of  one  hundred 
per  cent,  and  concurrently  a  revival  of  the  industry  of  ship¬ 
building.  On  the  other  hand,  this  transfer  of  the  wheat- 
supply  of  Great  Britain  represented  an  immense  change  in 


CHANGES  IN  TRANSPORTATION. 


317 


the  carrying-trade  and  business  of  the  United  States ;  while 
the  American  speculator,  recognizing  the  local  deficiency  of 
the  wheat-crop  for  1888,  and  assuming  that  the  American 
supply  of  this  cereal  was  the  prime  factor  in  determining  its 
European  price,  largely  advanced  prices  (the  average  price  of 
No.  2  red  winter  wheat  in  New  York  for  the  six  months 
ending  December,  1888,  having  been  $1.01  per  bushel,  as  com¬ 
pared  with  84.2  cents  for  the  corresponding  period  of  1887). 
But  in  this  they  were  disappointed.  The  European  prices  did 
not  materially  advance  ; 1  and  as  a  consequence,  while  the 
American  public  suffered,  “  the  British  consumer  was  enabled 
to  eat  his  loaf  at  the  same  price  or  a  less  price  than  he  did  in 
the  previous  year.”  And  if  the  consumer  was  not  a  student 
of  statistics,  he  would  not  have  been  in  the  least  conscious 
that  it  was  Russian  rather  than  American  grain  from  which 
his  bread  was  manufactured.  In  short,  under  the  system  of 
commercial  freedom  which  Great  Britain  has  established,  all 
the  farming  interests  on  the  earth  grow  with  an  eye  to  the 
possible  advent  of  the  British  people  as  customers ;  while 
the  latter,  on  their  part,  have  so  provided  themselves  with  the 
best  equipment  for  annihilating  time  and  distance,  that  it  is  a 
matter  of  indifference  to  them  whether  the  wheat-fields  which 
for  the  time  being  shall  have  their  preference  are  located  in 
India,  Russia,  Dakota,  South  America,  or  Australia. 

The  changes  effected  by  the  cheapened  means  of  transpor¬ 
tation  have  moreover  been  equalled,  if  not  surpassed,  by  those 
wrought  through  the  lessened  cost  and  increased  amount  of 
production.  The  world’s  total  product  of  pig-iron  increased 
slowly  and  regularly  from  1870  to  1879,  at  the  rate  of  about 
2J  per  cent  per  annum,  but  after  1879  production  increased 
enormously,  until  in  1883  the  advance  among  all  nations  was 
82.2  per  cent  in  excess  of  the  make  of  1870,  the  increase  in 
the  product  of  the  United  Kingdom  being  43  per  cent,  and 
that  of  other  countries  139.1  per  cent  (  Testimony  of  /Sir  Low - 
thian  Bell ,  British  Commission ,  1886).  Such  an  increase 

1  English  wheat  sold  December  25,  1888,  at  £1  11s.  3c?.  a  quarter,  against 
£1  11s.  2 d.y  or  cents  a  bushel  more  than  at  the  corresponding  date  in  1887, 
and  Is.  10c?.  less  than  in  December,  1886. 


318 


ECONOMIC  HISTORY. 


(after  1879),  justified  perhaps  at  the  moment,  was  far  in 
excess  of  the  ratio  of  increase  in  the  world’s  population,  and 
for  a  term  of  years  greatly  disproportionate  to  any  increase  in 
the  world’s  consumption,  and  finally  resulted  as  has  been 
before  shown  (see  Wells,  Chapter  I.),  in  an  extreme  depres¬ 
sion  of  the  business,  and  a  remarkable  fall  of  prices. 

By  reason  largely  of  the  cheapening  of  iron  and  steel,  the 
cost  of  building  railroads  has  also  in  recent  years  been  greatly 
reduced.  In  1870-71,  one  of  the  leading  railroads  of  the 
Northwestern  United  States  built  126  miles,  which  with  some 
tunnelling,  was  bonded  for  about  140,000  per  mile.  The  same 
road  could  now  (1889)  be  constructed,  with  the  payment  of 
higher  wages  to  laborers  of  all  classes,  for  about  $20,000  per 
mile. 

The  power  to  excavate  earth,  or  to  excavate  and  blast  rock, 
is  from  five  to  ten  times  as  great  as  it  was  when  operations 
for  the  construction  of  the  Suez  Canal  were  commenced,  in 
1859-60.  The  machinery  sent  to  the  Isthmus  of  Panama, 
for  the  excavation  of  the  canal  at  that  point  was  computed 
by  engineers  as  capable  of  performing  the  labor  of  half  a 
million  of  men. 

The  displacement  of  muscular  labor  in  some  of  the  cotton 
mills  of  the  United  States,  within  the  last  ten  years,  by  im¬ 
proved  machinery,  has  been  from  thirty-three  to  fifty  per  cent, 
and  the  average  work  of  one  operative,  working  one  year,  in 
the  best  mills  of  the  United  States,  will  now,  according  to 
Mr.  Atkinson,  supply  the  annual  wants  of  1,600  fully  clothed 
Chinese,  or  3,000  partially  clothed  East  Indians.  In  1840 
an  operative  in  the  cotton-mills  of  Rhode  Island,  working 
thirteen  to  fourteen  hours  a  day,  turned  off  9,600  yards  of 
standard  sheeting  in  a  year;  in  1886  the  operative  in  the 
same  mill  made  about  30,000  yards,  working  ten  hours  a  day. 
In  1840  the  wages  were  $176  a  year;  in  1886  the  wages  were 
$285  a  year. 

The  United  States  census  returns  for  1880  report  a  very 
large  increase  in  the  amount  of  coal  and  copper  produced 
during  the  ten  previous  years  in  this  country,  with  a  very 
large  comparative  diminution  in  the  number  of  hands  em- 


CHANGES  IN  TRANSPORTATION. 


319 


ployed  in  these  two  great  mining  industries  ;  in  anthracite 
coal  the  increase  in  the  number  of  hands  employed  having 
been  33.2  per  cent,  as  compared  with  an  increase  of  product 
of  82.7 ;  while  in  the  case  of  copper  the  ratios  were  15.8  and 
70.8,  respectively.  For  such  results,  the  use  of  cheaper  and 
more  powerful  blasting  agents  (dynamite),  and  of  the  steam- 
drill,  furnish  an  explanation.  And,  in  the  way  of  further 
illustration,  it  may  be  stated  that  a  car-load  of  coal,  in  the 
principal  mining  districts  of  the  United  States,  can  now 
(1889)  be  mined,  hoisted,  screened,  cleaned,  and  loaded  in 
one-half  the  time  that  it  required  ten  years  previously. 

The  report  of  the  United  States  Commissioner  of  Labor  for 

1886  furnishes  the  following  additional  illustrations  :  — 

• 

“In  the  manufacture  of  agricultural  implements,  specific  evi¬ 
dence  is  submitted,  showing  that  six  hundred  men  now  do  the 
work  that,  fifteen  or  twenty  years  ago,  would  have  required  2,145 
men,  — a  displacement  of  1,545. 

“The  manufacture  of  hoots  and  shoes  offers  some  very  wonder¬ 
ful  facts  in  this  connection.  In  one  large  and  long-established 
manufactory  the  proprietors  testify  that  it  would  require  five  hun¬ 
dred  persons,  working  by  hand  processes,  to  make  as  many  women’s 
boots  and  shoes  as  a  hundred  persons  now  make  with  the  aid  of 
machinery,  — a  displacement  of  eighty  per  cent. 

“Another  firm,  engaged  in  the  manufacture  of  children’s  shoes, 
states  that  the  introduction  of  new  machinery  within  the  past 
thirty  years  has  displaced  about  six  times  the  amount  of  hand- 
labor  required,  and  that  the  cost  of  the  product  has  been  reduced 
one  half. 

“On  another  grade  of  goods,  the  facts  collected  by  the  agents 
of  the  bureau  show  that  one  man  can  now  do  the  work  which 
twenty  years  ago  required  ten  men. 

“In  the  manufacture  of  flour  there  has  been  a  displacement  of 
nearly  three  fourths  of  the  manual  labor  necessary  to  produce  the 
same  product.  In  the  manufacture  of  furniture,  from  one  half  to 
three  fourths  only  of  the  old  number  of  persons  is  now  required. 
In  the  manufacture  of  wall-paper,  the  best  evidence  puts  the  dis¬ 
placement  in  the  proportion  of  one  hundred  to  one.  In  the  manu¬ 
facture  of  metals  and  metallic  goods,  long-established  firms  testify 
that  machinery  has  decreased  manual  labor  33^  per  cent.” 


320 


ECONOMIC  HISTORY. 


In  1845  the  boot  and  shoe  makers  of  Massachusetts  made 
an  average  production,  under  the  then  existing  conditions  of 
manufacturing,  of  1.52  pairs  of  boots  for  each  working  day. 
In  1885  each  employe  in  the  State  made  on  an  average  4.2 
pairs  daily,  while  at  the  present  time  in  Lynn  and  Haverhill 
the  daily  average  of  each  person  is  seven  pairs  per  day, 
“  showing  an  increase  in  the  power  of  production  in  forty 
years  of  four  hundred  per  cent.”  1  .  .  . 

But  in  respect  to  no  other  one  article  has  change  in  the 
conditions  of  production  and  distribution  been  productive  of 
such  momentous  consequences  as  in  the  case  of  wheat.  On 
the  great  wheat-fields  of  the  State  of  Dakota,  where  machinery 
is  applied  to  agriculture  to  such  an  extent  that  the  require¬ 
ment  for  manual  labor  has  been  reduced  to  a  minimum,  the 
annual  product  of  one  man’s  labor,  working  to  the  best  advan¬ 
tage,  is  understood  to  be  now  equivalent  to  the  production  of 
5,500  bushels  of  wheat.  In  the  great  mills  of  Minnesota,  the 
labor  of  another  one  man  for  a  year,  under  similar  conditions 
as  regards  machinery,  is  in  like  manner  equivalent  to  the 
conversion  of  this  unit  of  5,500  bushels  of  wheat  into  a  thou¬ 
sand  barrels  of  flour,  leaving  500  bushels  for  seed-purposes; 
and,  although  the  conditions  for  analysis  of  the  next  step  in 
the  way  of  results  are  more  difficult,  it  is  reasonably  certain 
that  the  year’s  labor  of  one  and  a  half  men  more  —  or,  at 
the  most,  two  men  —  employed  in  railroad  transportation,  is 
equivalent  to  putting  this  thousand  barrels  of  flour  on  a  dock 
in  New  York  ready  for  exportation,  where  the  addition  of  a 
fraction  of  a  cent  a  pound  to  the  price  will  further  transport 
and  deliver  it  at  almost  any  port  of  Europe.2 

1  Address  by  Mr.  F.  W.  Norcross,  November,  1888,  before  the  Boston  Boot 
and  Shoe  Club. 

2  When  the  wheat  reaches  New  York  city,  and  comes  into  the  possession 
of  a  great  baker,  who  has  established  the  manufacture  of  bread  on  a  large 
scale,  and  who  sells  the  best  of  bread  to  the  working-people  of  New  York  at 
the  lowest  possible  price,  we  find  that  one  thousand  barrels  of  flour  can  be  con¬ 
verted  into  bread  and  sold  over  the  counter  by  the  work  of  three  persons  for 
one  year.  Let  us  add  to  the  six  and  a  half  men  already  named  the  work  of 
another  man  six  months,  or  half  a  man  one  year,  to  keep  the  machinery  in  re¬ 
pair,  and  our  modern  miracle  is  that  seven  men  suffice  to  give  one  thousand 
persons  all  the  bread  they  customarily  consume  in  one  year.  If  to  these  we 


CHANGES  IN  TRANSPORTATION. 


321 


Here,  then,  we  have  the  labor  of  three  men  for  one  year, 
working  with  machinery,  resulting  in  the  producing  all  the 
flour  that  a  thousand  other  men  ordinarily  eat  in  a  year, 
allowing  one  barrel  of  flour  for  the  average  consumption  of 
each  adult.  Before  such  a  result  the  question  of  wages  paid 
in  the  different  branches  of  flour  production  and  transporta¬ 
tion  becomes  an  insignificant  factor  in  determining  a  market ; 
and,  accordingly,  American  flour  grown  in  Dakota,  and  ground 
in  Minneapolis,  from  a  thousand  to  fifteen  hundred  miles  from 
the  nearest  seaboard,  and  under  the  auspices  of  men  paid  from 
a  dollar  and  a  half  to  two  dollars  and  a  half  per  day  for  their 
labor,  is  sold  in  European  markets  at  rates  which  are  deter¬ 
minative  of  the  prices  which  Russian  peasants,  Egyptian 
“  fellahs, : ”  and  Indian  “  ryots,”  can  obtain  in  the  same  mar¬ 
kets  for  similar  grain  grown  by  them  on  equally  good  soil, 
and  with  from  fifteen  to  twenty  cents  per  day  wages  for  their 
labor. 

On  the  wheat-farms  of  the  Northwestern  United  States  it 
was  claimed  in  1887  that,  with  wages  at  twenty-five  dollars 
per  month  and  board,  for  permanent  employes,  wheat  could  be 
produced  for  forty  cents  per  bushel ;  while  in  Rhenish  Prussia, 
with  wages  at  six  dollars  per  month,  the  cost  of  production 
was  reported  to  be  eighty  cents  per  bushel.  .  .  . 

A  great  number  of  other  similar  and  equally  remarkable 
experiences,  derived  from  almost  every  department  of  indus¬ 
try  except  the  handicrafts,  might  be  presented ;  but  it  would 
seem  that  enough  evidence  has  been  offered  to  prove  abun¬ 
dantly  that,  in  the  increased  control  which  mankind  has 
acquired  over  the  forces  of  Nature,  and  in  the  increased  utili¬ 
zation  of  such  control  —  mainly  through  machinery  —  for  the 
work  of  production  and  distribution,  is  to  be  found  a  cause 
sufficient  to  account  for  most  if  not  all  the  economic  disturb¬ 
ance  which,  since  the  year  1873,  has  been  certainly  universal 
in  its  influence  over  the  domain  of  civilization, —  abnormal  to 
the  extent  of  justifying  the  claim  of  having  been  unprece- 

add  three  for  the  work  of  providing  fuel  and  other  materials  to  the  railroad 
and  the  baker,  our  final  result  is  that  ten  men  working  one  year  serve  bread 
to  one  thousand.  —  Edward  Atkinson,  Distribution  of  Products. 

21 


* 


* 


322 


ECONOMIC  HISTORY. 


dented  in  character,  and  which  bids  fair  in  a  greater  or  less 
degree  to  indefinitely  continue.  Other  causes  may  have  and 
doubtless  have  contributed  to  such  a  condition  of  affairs,  but 
in  this  one  cause  alone  (if  the  influences  referred  to  can  be 
properly  considered  as  a  unity)  it  would  seem  there  has  been 
sufficient  of  potentiality  to  account  not  only  for  all  the 
economic  phenomena  that  are  under  discussion,  but  to  occa¬ 
sion  a  feeling  of  wonder  that  the  world  has  accommodated 
itself  so  readily  to  the  extent  that  it  has  to  its  new  con¬ 
ditions,  and  that  the  disturbances  have  not  been  very  much 
greater  and  more  disastrous. 

A  question  which  these  conclusions  will  naturally  suggest 
may  at  once  be  anticipated.  Have  not  these  same  influences, 
it  may  be  asked,  been  exerted  during  the  whole  of  the  present 
century,  and  in  fact  ever  since  the  inception  of  civilization ; 
and  are  there  any  reasons  for  supposing  that  this  influence 
has  been  different  during  recent  years  in  kind  and  degree 
from  what  has  been  heretofore  experienced  ?  The  answer  is, 
Certainly  in  kind,  but  not  in  degree.  The  world  has  never 
seen  anything  comparable  to  the  results  of  the  recent  system 
of  transportation  by  land  and  water,  never  experienced  in  so 
short  a  time  such  an  expansion  of  all  that  pertains  to  what  is 
called  business,  and  has  never  before,  as  was  premised  at  the 
outset  of  this  argument,  been  able  to  accomplish  so  much  in 
the  way  of  production  with  a  given  amount  of  labor  in  a 
given  time.  Thus  it  is  claimed  in  respect  to  the  German 
Empire,  where  the  statistics  of  production  and  distribution 
have  doubtless  been  more  carefully  studied  by  experts  than 
elsewhere,  that  during  the  period  from  18T2  to  1885  there 
was  an  expansion  in  the  railroad  traffic  of  this  empire  of 
ninety  per  cent ;  in  marine  tonnage,  of  about  a  hundred  and 
twenty  per  cent;  in  the  general  mercantile  or  commercial 
movement,  of  sixty-seven  per  cent ;  in  postal  matter  carried, 
of  a  hundred  and  eight  per  cent ;  in  telegraphic  despatches, 
of  sixty-one  per  cent ;  and  in  bank  discounts,  of  two  hun¬ 
dred  and  forty  per  cent.  During  the  same  period  popula¬ 
tion  increased  about  eleven  and  a  half  per  cent ;  and  from 
such  data  there  has  been  a  general  deduction  that,  “  if  one 


CHANGES  IN  TRANSPORTATION. 


323 


unit  of  trade  was  the  ratio  to  one  unit  of  population  in 
Germany  in  1872,  the  proportion  in  1885  was  more  than 
ten  units  of  trade  to  one  of  population.”  But,  be  this  as  it 
may,  it  can  not  be  doubted  that  whatever  has  been  the  in¬ 
dustrial  expansion  of  Germany  in  recent  years,  it  has  been 
at  least  equalled  by  England,  approximated  to  by  France, 
and  certainly  surpassed  by  the  United  States.1 

There  is  very  much  that  contributes  to  the  support  of  the 
idea  which  has  been  suggested  by  M.  Laveleye,  editor  of  the 
“  Moniteur  des  Interets  Mat^riels,”  at  Brussels,  that  the 
industrial  activity  of  the  greater  part  of  this  century  has 
been  devoted  to  fully  equipping  the  civilized  countries  of 
the  world  with  economic  tools,  and  that  the  work  of  the  fu¬ 
ture  in  this  same  sphere  must  be  necessarily  that  of  repair 
and  replacements  rather  than  of  new  constructions.  But  a 
more  important  inference  from  this  same  idea,  and  one  that 
fully  harmonizes  with  and  rationally  explains  the  phenomena 
of  the  existing  situation  is  that,  the  equipment  having  at  last 
been  made  ready,  the  work  of  using  it  for  production  has  in 
turn  begun,  and  has  been  prosecuted  so  efficiently  that  the 
world  has  within  recent  years,  and  for  the  first  time,  become 
saturated,  as  it  were,  under  existing  conditions  for  use  and 
consumption,  with  the  results  of  these  modern  improvements. 

Again,  although  the  great  natural  labor-saving  agencies 
had  been  recognized  and  brought  into  use  many  years  prior 
to  1870,  their  powers  were  long  kept,  as  it  were,  in  abeyance  ; 
because  it  required  time  for  the  instrumentalities  or  methods, 
by  which  the  world’s  work  of  production  and  distribution  was 
carried  on,  to  adjust  themselves  to  new  conditions ;  and  until 
this  was  accomplished,  an  almost  infinite  number  and  variety 
of  inventions  which  genius  had  produced  for  facilitating  and 

1  A  statistical  exhibit  of  the  growth  of  British  industrial  interests  during 
the  reign  of  Queen  Victoria  (fifty  years),  published  in  1887,  in  connection  with 
the  “Queen’s  Jubilee,”  showed  that  the  production  of  coal  has  increased  in 
Great  Britain  during  this  period  from  36,000,000  tons  to  147,000,000  tons  per 
annum ;  and  that  manuff.ctures  had  increased  in  about  an  equal  ratio  with  the 
output  of  coal  —  that  is  to  say,  had  about  quadrupled  (four  hundred  per  cent). 
Meanwhile,  the  population  of  the  United  Kingdom  increased  only  thirty-three 
per  cent. 


324 


ECONOMIC  HISTORY. 


accelerating  industrial  evolution  were  matters  of  promise 
rather  than  of  consummation.  But,  with  the  extension  of 
popular  education  and  the  rapid  diffusion  of  intelligence,  all 
new  achievements  in  science  and  art  have  been  brought  in 
recent  years  so  much  more  rapidly  “  within  the  sphere  of  the 
every-day  activity  of  the  people  ”  —  as  the  noted  German  in¬ 
ventor,  Dr.  Werner  Siemens,  has  expressed  it  —  “  that  stages 
of  development  which  ages  ago  required  centuries  for  their 
consummation,  and  which  at  the  beginning  of  our  times 
required  decades,  now  complete  themselves  in  years,  and 
not  unfrequently  present  themselves  at  once  in  a  state  of 
completeness.” 

It  should  also  be  remembered  that  fifty  years  ago  the 
“  sciences  ”  were  little  more  than  a  mass  of  ill-digested  facts 
or  u  unassorted  laws,”  and  that  in  the  departments  of  physics 
and  chemistry  comparatively  little  had  been  accomplished 
in  the  way  of  industrial  application  and  direction.  To  say, 
indeed,  what  the  world  did  not  have  half  a  century  ago  is 
almost  equivalent  to  enumerating  all  those  things  which  in 
their  understanding,  possession,  and  common  use  the  world 
now  regards  as  constituting  the  dividing  lines  between  civili¬ 
zation  and  barbarism.  Thus,  fifty  years  ago  the  railroad  and 
the  locomotive  were  practically  unknown.  The  ocean  steam 
marine  dates  from  1838,  when  the  Sirius  and  Great  West¬ 
ern —  the  two  pioneer  vessels  —  crossed  the  Atlantic  to  New 
York.  Electricity  had  then  hardly  got  “  beyond  the  stage  of 
an  elegant  amusement,”  and  the  telegraph  was  not  really 
brought  into  practical  use  before  1844.  The  following  is  a 
further  partial  list  of  the  inventions,  discoveries,  and  applica¬ 
tions  whose  initial  point  of  “  being  ”  is  not  only  more  recent 
than  the  half-century,  but  whose  fuller  or  larger  development 
in  a  majority  of  instances  is  also  referable  to  a  much  more 
recent  date :  the  mechanical  reapers,  mowing  and  seeding 
machines,  the  steam  plough,  and  most  other  eminently  labor- 
saving  agricultural  devices  ;  the  Bessemer  process  and  the 
steel  rail  (185T)  ;  the  submarine  and  trans-oceanic  telegraph 
cables  (1866 );  photography  and  all  its  adjuncts  ;  electro-plating 
and  the  electrotype ;  the  steam-hammer,  repeating  and  breech- 


CHANGES  IN  TRANSPORTATION. 


825 


loading  fire-arms,  and  rifled  and  steel  cannon ;  gun-cotton 
and  dynamite ;  the  industrial  use  of  India-rubber  and  gutta¬ 
percha  ;  the  steam-excavator  and  steam-drill ;  the  sewing- 
machine  ;  the  practical  use  of  the  electric  light ;  the  applica¬ 
tion  of  dynamic  electricity  as  a  motor  for  machinery  ;  the 
steam  fire-engine  ;  the  telephone,  microphone,  spectroscope, 
and  the  process  of  spectral  analysis ;  the  polariscope ;  the 
compound  steam-engine ;  the  centrifugal  process  of  refining 
sugar ;  the  rotary  printing-press  ;  hydraulic  lifts,  cranes,  and 
elevators  ;  the  “  regenerative  ”  furnace,  iron  and  steel  ships, 
pressed  glass,  wire  rope,  petroleum  and  its  derivatives,  and 
aniline  dyes  ;  the  industrial  use  of  the  metal  nickel,  cotton¬ 
seed  oil,  artificial  butter,  stearine-candles,  natural  gas,  cheap 
postage,  and  the  postage-stamp.  Electricity,  which  a  very 
few  years  ago  was  regarded  as  something  wholly  immaterial, 
has  now  acquired  a  sufficiently  objective  existence  to  admit  of 
being  manufactured  and  sold  the  same  as  pig-iron  or  leather. 
In  short,  to  one  whose  present  memory  and  life-experiences 
do  not  extend  over  a  period  of  time  more  extensive  than 
what  is  represented  by  a  generation,  the  recital  of  the  econ¬ 
omic  experiences  and  industrial  conditions  of  the  generation 
next  preceding  is  very 'much  akin  to  a  recurrence  to  ancient 
history.  .  .  . 


326 


ECONOMIC  HISTORY . 


XIII. 


THE  FRENCH  INDEMNITY. 

THE  PAYMENT  OF  THE  FIVE  MILLIARDS. 
Blackwood’s  Edinburgh  Magazine,  Feb.  1875,  pp.  172-187. 

S  soon  as  it  became  known,  five  years  ago,  that  France  had 


-lx-  to  hand  over  <£200,000,000  to  Germany,  it  was  generally 
predicted  that  the  financial  equilibrium  of  Europe  would  be  up¬ 
set  by  the  transfer  of  so  vast  a  sum  from  one  country  to  another, 
and  that  the  whole  system  of  international  monetary  relation¬ 
ship  would  be  thrown  into  confusion.  Apprehensions  of  an 
analogous  nature  were  abundantly  expressed  when  the  two 
French  loans  successively  came  out.  Wise  bankers  shook 
their  heads  in  Frankfort,  London,  Amsterdam,  and  Brussels, 
and  assured  their  listeners  that,  though  the  money  would  prob¬ 
ably  be  subscribed,  it  could  not  possibly  be  paid  up  under  five 
years  at  least.  And  yet  the  whole  of  this  vast  transaction 
was  carried  out  between  1st  June,  1871,  and  5th  September, 
1873  ;  twenty-seven  months  sufficed  for  its  completion  ;  and 
not  one  single  serious  difficulty  or  disorder  was  produced  by 
it.  The  fact  was  that  the  commercial  world  had  no  idea  of 
its  own  power ;  it  thought  itself  much  smaller  than  it  really 
is  ;  it  failed  altogether  to  suspect  that  its  own  current  opera¬ 
tions  were  already  so  enormous  that  even  the  remittance  of 
five  milliards  from  France  to  Germany  could  be  grafted  on  to 
them  without  entailing  any  material  perturbation.  Such, 
however,  has  turned  out  to  be  the  case  ;  and  of  all  the  les¬ 
sons  furnished  by  the  war,  no  other  is  more  practical  or  more 
strange.  The  story  of  it  is  told,  in  detail,  in  a  special  report 
which  has  recently  been  addressed  by  M.  Leon  Say  to  the 
Commission  of  the  Budget  in  the  French  Chamber.  It  is  so 


THE  FRENCH  INDEMNITY. 


327 


curious  and  instructive  that  it  is  well  worth  while  to  analyze 
it.  It  may,  however,  be  mentioned,  that  the  order  of  exposi¬ 
tion  adopted  by  M.  Say  is  not  followed  here.  To  render  the 
tale  clear  to  English  readers,  the  form  of  it  is  changed. 

But  before  explaining  the  processes  by  which  the  war  in¬ 
demnity  was  paid,  it  will  be  useful  to  recall  the  principal 
features  of  the  position  in  which  France  was  placed  by 
her  defeat.  It  is  now  computed  that  the  entire  cost  of 
the  campaign  amounted,  directly  and  indirectly,  to  about 
£416,000,000 ;  and  this  outlay  may  be  divided  into  five  sec¬ 
tions, —  the  first  three  of  which  were  declared  officially  by 
the  Minister  of  Finance  in  his  report  of  28th  October,  1873, 
while  the  two  others  have  been  arrived  at  by  a  comparison 
of  various  private  calculations.  They  are  composed  as 
follows :  — 

1.  Sums  paid  by  France  for  her  own  military  operations  — 


War  expenses  to  the  end  of  1872  .  £76,480,000 

Food  bought  for  Paris  before  the  siege  ....  6,781,000 

Assistance  to  families  of  soldiers,  etc .  2,000,000 

Balance  of  war  expenses  payable  out  of  the  Liquida¬ 
tion  Account  .  21,942,000 


Total  of  French  expenses  proper  .  ,  .  £107,203,000 


2.  Sums  paid  to  Germany  — 

Indemnity  . £200,000,000 

Interest  on  unpaid  instalments  of  indemnity  .  .  12,065,000 

Maintenance  of  German  army  of  occupation  .  .  9,945,000 

Taxes  levied  by  the  Germans  .......  2,468,000 


Total  paid  to  Germany . £224,478,000 


3.  Collateral  expenses  — 

Cost  of  issue  of  the  various  war  loans,  rebates  of 
interest,  exchange,  and  cost  of  remitting  the 


indemnity .  £25,247,000 

Loss  or  diminution  of  taxes  and  revenue  in  conse¬ 
quence  of  the  war  . .  „  .  14,567,000 


Total  of  collateral  expenses .  £39,814,000 


328 


ECONOMIC  HISTORY. 


4.  Requisitions  in  cash  or  objects  — 

Supplied  by  towns  or  individuals,  including  the 


£8,000,000  paid  by  Paris,  estimated  at  .  .  £15,000,000 

5.  Loss  of  profts  consequent  upon  the  suspension  of  trade  — 

Estimated  at . £30,000,000 

Resume. 

1  .  £107,203,000 

2  .  224,478,000 

3  .  39,814,000 

4  .  15,000,000 

5  .  30,000,000 

General  Total  .  £416,495,000 


Now,  what  has  France  to  show  against  this  ? 

Her  annual  gains  before  the  war  were  put  by  M.  Maurice  Block 
(“  Europe,  Politique  et  Sociale,”  p.  317)  at  £900,000,000;  un¬ 
fortunately  he  does  not  tell  us  how  much  of  this  she  spends, 
and  how  much  she  lays  by  ;  but  there  is  a  prevalent  impres¬ 
sion  in  France  that  her  annual  savings  amount  to  £80,000,000. 
We  shall  mention  presently  a  calculation  which  seems  to  in¬ 
dicate  that,  during  the  later  period  of  the  Empire,  they  must 
have  amounted  to  a  considerably  larger  sum  than  this  ;  but  if 
we  admit  it,  for  the  moment,  as  correct,  it  ‘would  follow  that 
the  cost  of  the  war,  in  capital,  represented  five  years’  ac¬ 
cumulation  of  the  net  profits  of  the  country.  It  is  not,  how¬ 
ever,  in  that  form  that  a  proportion  can  be  established 
between  liabilities  and  resources ;  the  measurement  must  be 
made,  not  in  capital, but  in  interest;  for  it  is, of  course,  in  the 
latter  form  alone  —  that  is  to  say,  in  new  taxation  to  pay  in¬ 
terest  on  loans  —  that  France  now  feels  the  pressure.  That 
new  taxation,  when  completed  (it  is  not  all  voted  yet),  will 
amount  to  about  £26,000,000  a  year;  and  that  is  the  real 
sum  which  is  to  be  deducted  from  the  annual  profits  of  the 
country  in  consequence  of  the  war.  Now,  if  those  profits 
were  only  £80,000,000,  and  if  they  are  not  progressing,  but 
standing  still  at  their  previous  rate,  this  deduction  would  ab¬ 
sorb  almost  a  third  of  them ;  but  as  they  are  continually  ad- 


THE  FRENCH  INDEMNITY. 


329 


vancing  —  as  eyerv  branch  of  trade  in  France  is  active  —  as 
foreign  commerce,  which  is  generally  accepted  as  a  safe  test  of 
national  prosperity,  was  one  fifth  larger  in  1873  than  in  1869 
—  it  may  fairly  be  supposed  that,  after  paying  the  £26,000,000 
of  war  taxes,  France  is  effectively  laying  by  as  much  as  she 
did  in  the  best  years  before  the  war,  whatever  that  really  was. 

After  this  rough  indication  of  the  situation,  we  shall  better 
understand  the  story  of  the  five  milliards.  It  is  scarcely  pos¬ 
sible  to  disassociate  it  from  the  general  attendant  circum¬ 
stances  of  the  position  as  a  whole  ;  the  two  should  be  kept  in 
view  together. 

The  payment  of  the  indemnity,  and  the  detailed  conditions 
under  which  that  payment  was  to  be  made,  were  stipulated  in 
the  three  treaties  or  conventions  signed  successively  at  Ver¬ 
sailles,  Ferrieres,  and  Frankfort,  in  January,  March,  and  May, 
1871.  It  was  determined  by  the  last-named  treaty  that  “  pay¬ 
ments  can  be  made  only  in  the  principal  commercial  towns  of 
Germany,  and  shall  be  effected  in  gold  or  silver,  in  English, 
Prussian,  Dutch,  or  Belgian  bank-notes,  or  in  commercial 
bills  of  the  first  class.”  The  rates  of  exchange  on  coin  were 
fixed  at  3f.  75c.  per  thaler,  or  at  2f.  15c.  per  Frankfort  florin ; 
and  it  was  agreed  that  the  instalments  should  be  paid  as 
follows :  — 


30  days  after  the  suppression  of  the  Commune  .  £20,000,000 

During  1871  40,000,000 

1st  May,  1872  .  20,000,000 

2d  March,  1874  120,000,000 


Total  ' .  £200,000,000 


The  last  £120,000,000  were  to  bear  interest  at  5  per  cent. 

It  must  be  particularly  observed  that  no  currency  was  to 
be  “  liberative  ”  excepting  coin,  German  thalers,  or  German 
florins.  The  other  forms  of  money  which  the  German  Gov¬ 
ernment  consented  to  accept  did  not  constitute  a  definite  pay¬ 
ment  ;  it  was  not  until  those  other  forms  were  converted  into 
their  equivalent  value  in  thalers  or  in  florins  that  the  pay¬ 
ment  became  “  liberative.”  This  was  the  essential  basis  of 
the  bargain. 


330 


ECONOMIC  HISTORY. 


Furthermore,  it  was  declared  that  the  instalments  must  be 
paid  at  the  precise  dates  fixed,  neither  before  nor  afterwards  ; 
and  that  no  payments  on  account  should  be  allowed.  It  was 
not  till  July,  1872,  that  leave  was  given  to  make  partial  pay¬ 
ments,  but  only  then  with  the  express  reservation  that  such 
partial  payments  should  never  be  for  less  than  <£4,000,000  at 
a  time,  and  that  one  month’s  notice  of  them  should  be  given 
on  each  occasion.  Under  no  circumstances,  from  first  to  last, 
was  any  payment  permitted  on  account. 

Two  main  conditions, therefore,  governed  the  operation:  the 
first,  that  all  payments  made  in  anything  but  coin  or  a  proper 
German  form  were  to  be  converted  into  a  German  form  at 
the  expense  of  France ;  the  second,  that  the  proceeds  of  all 
bills  or  securities  which  fell  due  prior  to  the  date  fixed  for 
an  instalment,  were  to  be  held  over  until  that  date.  The 
dates  themselves  were  ultimately  changed, — the  last  payment 
was  advanced  six  months  ;  but,  with  two  special  exceptions, 
those  conditions  were  rigorously  enforced  throughout  the 
entire  business. 

As  the  annexation  of  Alsace-Lorraine  to  the  German 
Empire  obliged  the  Eastern  Railway  Company  of  France  to 
abandon  all  its  lines  within  those  provinces,  it  was  agreed 
that  Germany  should  pay  for  them,  that  the  price  should  be 
£13,000,000,  and  that  this  sum  should  be  deducted  from  the 
indemnity.  This  was  the  first  exception.  The  second  was 
that  Germany  consented,  as  a  favor,  to  accept  £5,000,000  in 
French  bank-notes.  By  these  two  means  the  £200,000,000 
were  reduced  to  £182,000,000.  But  thereto  must  be  added 
£12,065,000  for  interest  which  accrued  successively  during 
the  transaction,  and  which  carried  the  total  for  payment  in 
coin  or  German  money  to  £191,065,000.  And  even  this 
was  not  quite  all,  for  France  had  to  furnish  a  further  sum  of 
about  £580,000  for  exchange,  and  for  expenses  in  the  con¬ 
version  of  foreign  securities  into  German  value.  This  last 
amount  does  not  appear  to  be  finally  agreed  between  the  two 
Governments;  there  is  a  dispute  about  it;  but  as  the  differ¬ 
ence  extends  only  to  a  few  thousand  pounds,  the  final 
sum  remitted  may  be  taken  at  about  £191,615,000  or  at 


THE  FRENCH  INDEMNITY. 


331 


£199,645,000,  if  we  include  the  £5,000,000  of  French  bank¬ 
notes.  The  £13,000,000  credited  for  the  railways  carried 
the  entire  total  of  the  indemnity,  with  interest  and  ex¬ 
penses,  to  £212,645,000. 

The  first  payment  (in  French  bank-notes)  was  made  on 
June  1,  1871.  As  the  first  loan  was  not  brought  out  until 
the  end  of  the  same  month,  £5,000,000  were  taken  for  the 
purpose  from  the  Bank  of  France ;  hut  with  that  exception 
and  subject  to  temporary  advances  (as  will  be  seen  hereafter), 
the  funds  for  the  entire  outgoing  were  provided  by  the  two 
great  loans;  the  interest  was,  however,  charged  separately 
to  the  budget.  Consequently,  the  money  was  derived  suc¬ 
cessively  from  the  following  sources  :  — 


The  value  of  the  Alsace-Lorraine  railways  .  . 

Loan  from  the  Bank  of  France . 

Out  of  the  first  loan  for  two  milliards  .  .  . 

Out  of  the  second  loan  for  three  milliards  .  . 

Out  of  the  budgets  of  1872  and  1873  (interest) 


£13,000,000 

5,000,000 

62,478,000 

120,102,000 

12,065,000 


Total 


£212,645,000 


It  is  not  necessary  to  go  into  the  details  of  the  dealings 
with  the  Bank  of  France,  of  the  subscription  of  the  loans,  or 
of  the  dates  and  proportions  of  the  payments  made  upon 
them.  It  will  suffice  to  observe,  as  regards  those  elements 
of  the  subject,  that  though  the  payments  on  the  loans  came 
in,  nominally,  before  the  dates  fixed  for  the  delivery  of  the 
corresponding  instalments  to  Germany,  they,  practically, 
were  not  always  available  in  time.  The  reason  was  that, 
though  the  actual  handing  over  to  Berlin  took  place  at  fixed 
periods,  the  remittances  themselves  were  necessarily  both 
anterior  and  continuous,  their  proceeds  being  accumulated 
by  French  agents  until  wanted.  The  result  was  that  the 
French  Ministry  of  Finance  was  under  the  necessity  of  mak¬ 
ing  almost  constant  advances  on  account  of  those  remit¬ 
tances.  Each  time  a  payment  was  coming  due,  the  means 
of  effecting  it  had  to  be  arranged  long  beforehand.  It  is 
not  possible  to  collect  or  carry  £20,000,000  at  a  week’s 
notice,  so  the  Treasury  was  of  course  obliged  to  keep  on 


332 


ECONOMIC  HISTORY. 


buying  bills  as  fast  as  it  could  get  them,  in  order  to  have  a 
stock  in  hand  for  future  needs.  That  stock  fluctuated  a 
good  deal,  and  there  is  some  contradiction  in  M.  Leon  Say’s 
report  as  to  its  amount  ;  but  it  appears,  at  one  period,  to 
have  ranged  for  months  as  high  as  £ 30, 000, 000,  part  of  the 
cash  to  pay  for  it  being  provided  temporarily,  until  the  loan 
moneys  came  in,  either  by  Exchequer  bills  or  by  the  Bank 
of  France  in  notes. 

There  was,  moreover,  towards  the  end  of  the  operation,  an 
advance  made  specially  in  gold  by  the  Bank  of  France;  and, 
as  the  circumstances  under  which  it  was  effected  present  a 
certain  interest,  it  will  be  worth  while  to  state  them.  In 
May,  1873,  the  French  Treasury  had  before  it  the  obligation 
of  providing  £40, 000, 000  between  5th  June  and  5th  Septem¬ 
ber;  £24,000,000  of  bills  were  in  hand  for  the  purpose,  and 
about  £10,000,000  of  instalments  were  coming  due  on  the 
loan;  but  there  was,  at  the  best,  a  clear  deficit  of  about 
£6,000,000  in  the  resources  available.  The  Bank  of  France 
agreed  to  supply  that  sum ;  but  as,  at  that  very  moment,  the 
circulation  of  its  notes  had  reached  £112,000,000,  and  as  it 
had,  consequently,  only  a  margin  of  £16,000,000  between 
that  figure  and  its  total  authorized  issue  of  £128,000,000,  it 
seemed  dangerous  to  withdraw  £6,000,000  of  that  margin  in 
notes,  and  it  was  decided  to  effect  the  loan  by  preference  in 
gold.  It  is  worth  remarking  that  this  is  probably  the  first 
example,  in  the  history  of  national  banks,  of  a  bank  electing 
to  make  an  advance  in  gold,  as  being  less  “  dangerous  ”  than 
the  delivery  of  its  own  notes.  The  French  Treasury  was  of 
course  well  pleased  to  obtain  bullion,  which  was  immedi¬ 
ately  “  liberative,”  instead  of  notes,  which  would  have  had 
to  be  converted  into  bills  at  various  dates.  But,  after  all, 
this  aid  did  not  suffice;  the  incomings  from  the  loan  did  not 
arrive,  practically,  in  time  for  use,  and  the  Treasury  had  to 
supply  a  further  final  balance  of  £9,760,000  to  enable  the 
concluding  payment  to  Germany  to  be  regularly  effected. 

Finally,  it  may  be  noted  that  there  were  thirty-three  de¬ 
liveries  to  Germany,  the  component  parts  of  each  of  which 
were  so  scrupulously  verified  by  the  representatives  of  the 


THE  FRENCH  INDEMNITY. 


333 


Berlin  Finance  Department  that  several  days  were  occupied 
by  the  counting,  on  each  occasion.  Indeed,  when  thalers 
had  to  be  told  up,  the  maximum  got  through  in  a  day  never 
exceeded  £32,000. 

After  these  preliminary  explanations  we  can  now  begin  to 
show  the  means  by  which  the  transfer  was  performed.  We 
will  divide  them,  in  the  first  instance,  into  four  categories :  — 

1.  German  bank-notes  and  money  collected  in 


France  after  the  war .  £4,201,000 

2.  French  gold  and  silver .  20,492,000 

3.  French  Bank-notes .  5,000,000 

4.  Bills .  169,952,000 


Total . £199,645,000 


The  first  observation  to  be  made  here  is  that  the  German 
money  found  in  France  amounts  to  a  singularly  large  sum; 
indeed,  if  this  proof  of  its  importance  had  not  been  furnished 
no  one  could  possibly  have  suspected  that  the  invaders,  for 
their  personal  and  private  necessities,  had  spent  anything 
like  so  much.  Their  wants,  as  soldiers,  were  supplied  dur¬ 
ing  the  war,  either  by  stores  sent  from  Germany  or  by  requi¬ 
sitions  levied  in  France ;  until  peace  was  signed  they  paid 
for  no  objects  of  public  or  official  need ;  all  this  cash  repre¬ 
sented,  therefore,  individual  expenditure.  And  manifestly 
the  real  total  must  have  been  still  larger.  It  cannot  be 
supposed  that  the  whole  of  the  German  money  spent  in 
France  was  reserved  by  its  French  proprietors  for  sale  to 
their  own  Government ;  it  may  be  taken  for  granted  that  a 
considerable  portion  of  it  went  back  straight  to  Germany 
through  ordinary  channels ;  and  it  may  be  guessed  that  the 
entire  sum  expended  by  the  conquerors,  out  of  their  individ¬ 
ual  resources,  in  German  money,  was  at  least  a  half  more 
than  the  amount  here  shown,  and  that  it  consequently  at¬ 
tained  £6,000,000.  The  question  is  curious,  and  this  is  the 
first  time  that  any  official  information  bearing  on  it  has  been 
published.  It  remains  to  add,  as  regards  this  element  of 
the  payment,  that,  as  might  have  been  expected,  the  German 
money  was  included,  almost  entirely,  in  the  earlier  instal- 


334 


ECONOMIC  HISTORY. 


ments,  and  that  scarcely  any  of  it  appeared  in  the  later 
remittances. 

The  X  20, 492, 000  of  French  money  was  composed  of 
£  10, 920, 000  in  gold  and  £  9, 572, 000  in  silver.  But  it 
should  be  said  at  once  that  these  figures  express  only  the 
amounts  transmitted  by  the  French  Government  officially, 
and  do  not  comprise  the  quantities  of  French  gold  bought  by 
Germany  or  forwarded  by  private  bankers  to  cover  their  own 
bills ;  these  other  quantities  will  be  referred  to  presently. 
£6,000,000  of  the  Government  gold  were  supplied  by  the 
Bank  of  France ;  the  rest  was  bought  from  dealers  or  fur¬ 
nished  by  the  Treasury.  Of  the  silver  <£5, 840,000  were 
obtained  in  France,  and  £3,732,000  were  drawn,  in  bars, 
from  Hamburg,  and  coined  in  Paris. 

But  these  direct  remittances  of  German  and  French  cash 
represented  after  all  only  about  one  eighth  of  the  entire  pay¬ 
ment;  the  other  seven  eighths  were  transferred  by  bills,  and 
it  is  in  this  section  of  the  matter  that  its  great  interest  lies. 
It  will  at  once  be  seen  that,  as  no  remittance  in  paper  became 
“  liberative  ”  until  it  was  converted  into  an  equivalent  value 
in  thalers  or  in  florins,  the  French  Treasury  could  obtain  no 
receipt  for  an  instalment  until  all  its  various  elements  had 
been  so  converted;  its  object,  therefore,  was  to  obtain  the 
largest  possible  amount  of  bills  on  Germany,  so  that,  at  tlicir 
maturity,  their  proceeds  might  be  at  once  available  in  the 
prescribed  form.  But  at  the  same  time  it  was  quite  im¬ 
possible  to  collect  in  France  alone,  within  the  time  allowed, 
anything  approaching  to  the  quantity  of  German  bills  re¬ 
quired.  The  result  was  that  it  was  found  necessary  not 
only  to  hand  in  a  large  amount  of  bills  on  other  countries, 
which  had  to  be  converted  into  German  values  at  the  cost 
of  France,  but  also,  as  regards  the  purchase  of  direct  bills 
on  Germany,  to  effect  it  frequently  in  two  stages.  In  the 
first  stage  bills  were  bought  in  Paris,  as  they  offered,  on 
England,  Belgium,  or  Holland;  in  the  second,  a  portion 
of  the  proceeds  of  those  bills  was  reinvested,  in  those  coun¬ 
tries,  in  other  bills  on  Germany  itself.  Of  course  the 
French  Government  was  very  anxious  to  employ  every  sort 


THE  FRENCH  INDEMNITY. 


335 


of  means  to  increase  the  quantity  of  German  bills,  and  to 
avoid  leaving  to  the  German  Treasury  the  right  of  convert¬ 
ing  foreign  paper  into  German  value  at  French  expense.  At 
the  origin  of  the  operation  the  importance  of  this  element  of 
it  was  not  fully  realized;  but  by  degrees  the  French  minister 
discovered  that  it  was  far  more  advantageous  to  effect  his 
conversions  himself  than  to  leave  them  to  be  carried  out 
anyhow  at  Berlin.  The  result  of  this  discovery  was  that, 
while  £454,000  were  paid  to  Germany  for  the  cost  of  con¬ 
version  on  the  first  two  milliards,  only  £11,000  were  paid  to 
her  under  the  same  head  on  the  remaining  three  milliards. 
After  the  experience  of  the  first  twelve  months,  France  sought 
for  bills  on  Germany  wherever  she  could  get  them  all  over 
Europe ;  and  it  may  be  added  that  she  was  somewhat  aided 
in  the  effort  by  the  special  position  of  Germany,  who,  at  the 
moment,  was  in  debt  considerably  to  England  not  only  for 
the  war  loans  she  had  issued  there,  but  also  on  commercial 
account  as  well.  But,  as  has  just  been  mentioned,  a  good 
many  of  these  bills  were  substitutions  for  each  other,  and 
consequently  the  amount  of  paper  shown  as  bought  is  con¬ 
siderably  larger  than  the  real  sum  paid  to  Germany,  the 
reason  being  that  a  good  deal  of  it  appears  in  the  account 
twice  over.  The  following  table  gives  the  composition  of 
the  total  quantity  of  bills  bought  bjr  France :  — 


Bills  on  Germany,  bought  direct,  in  thalers  .  £62,550,000 

“  “  “  “  “  in  florins  .  9,548,000 

“  “  “  bought,  in  thalers,  with  the 

proceeds  of  other  bills  .  42,218,000 

“  “  “  in  reichsmarcs .....  3,172,000 

“  “  England,  in  sterling .  61,780,000 

“  “  Hamburg,  in  marcs-banco  ....  21,432,000 

“  “  Belgium,  in  francs .  20,856,000 

“  u  Holland,  in  florins .  12,952,000 


Total . £234,508,000 

* 

s 


These  bills  were  paid  for  mainly  in  French  bank-notes; 
and  the  average  rates  of  exchange  at  which  they  were  bought 
came  out  as  follows,  for  the  entire  operation :  - — 


336 


ECONOMIC  HISTORY. 


Francs. 

Thalers . 3.7910 

Pounds  sterling .  25.4943 

Marcs-banco .  1.9089 

Belgian  francs .  1.0061 

Dutch  florins . 2.1500 

Frankfort  florins . 2.1637 

Reichsmarcs .  1.2528 

* 


Every  one  at  all  acquainted  with  exchanges  will  recognize 
how  low,  under  such  circumstances,  these  prices  are;  and 
will  ask,  with  wonder,  how  they  can  have  been  kept  down  to 
such  averages  on  so  large  an  undertaking. 

But  though  the  foregoing  table  shows  the  quantities  of 
bills,  of  each  kind,  that  were  bought  by  the  French  Govern¬ 
ment  as  vehicles  of  transmission,  it  in  no  way  indicates  the 
form  in  which  the  money  was  in  reality  handed  over  to  the 
German  Treasury.  Most  of  the  above  figures  were  largely 
modified  by  conversions  and  substitutions';  and  when  all  the 
bills  had  been  cashed,  when  the  whole  payment  had  been 
effected,  it  appeared  that  the  real  totals  of  each  sort  of  cur¬ 
rency  which  had  been  finally  delivered  to  Germany  were  as 
follows :  — 


French  bank-notes .  £5,000,000 

“  gold .  10,920,000 

“  silver .  9,572,000 

German  notes  and  cash .  4,201,000 

Bills  —  Thalers .  99,412,000 

“  — Frankfort  florins .  9,404,000 

“  — Marcs-banco .  10,608,000 

“  — Reichsmarcs .  3,190,000 

“  — Dutch  florins .  10,020,000 

“  — (and  in  silver)  —  Belgian  francs  .  .  11,828,000 

“  — Pounds  sterling .  25,490,000 


Total . £199,645,000 


This  catalogue  shows  at  last  in  what  shape  the  bills  were 
really  utilized  and  made  “  liberative,  ”  either  in  German 
money  direct,  or  by  the  equivalent  of  foreign  value  in  thalers 
or  florins.  The  differences  of  composition  between  this  defi- 


837 


THE  FRENCH  INDEMNITY. 

nitive  list  and  that  of  the  bills  originally  bought  are  only 
partially  explained  by  M.  Leon  Say ;  it  is  not,  however, 
necessary,  nor  would  it  be  interesting,  to  follow  out  precisely 
the  various  conversions  which  took  place ;  we  will  only  men¬ 
tion,  as  an  illustration,  that  out  of  the  <£61,780,000  of  original 
bills  in  England  £31,687,000  were  converted  here  into  other 
bills  on  ^Germany,  that  £25,490,000  were  sent  to  Berlin  in 
sterling  bill,  and  that  the  balance  remains  unexplained.  As 
regards  the  direct  delivery  by  France  herself,  of  English, 
Belgian,  or  Dutch  bullion,  the  report  says  nothing;  it  is 
only  stated  incidentally  that  £720,000  of  Belgian  francs 
were  sent  to  Berlin  in  metal,  and  that  the  London  agency  of 
the  French  Treasury  bought  £1,132,000  here  in  gold  and 
silver,  which  probably  was  also  shipped  to  Berlin ;  but  these 
are  the  sole  allusions  to  the  subject.  It  is  probable,  as  in¬ 
deed  has  always  been  supposed,  that  the  bullion  which  was 
withdrawn,  during  the  operation,  from  London,  Brussels, 
and  Amsterdam,  was  not  taken  for  French  account,  but  by 
Germany  out  of  the  sums  at  her  disposal  in  each  place  after 
the  bills  on  that  place  had  matured. 

We  have  now  before  us,  in  a  condensed  form,  the  main 
elements  of  this  prodigious  operation ;  we  see  now  what  were 
the  conditions  which  regulated  it,  where  the  money  came 
from  to  realize  it,  how  that  money  was  successively  employed, 
and  in  what  shapes  the  payments  were  at  last  effected. 

We  recognize  that  France  herself  provided,  in 

her  own  notes  and  coin  .  .  .  £25,492,000 

“  “  that  German  money  and  bills  on 

Germany  produced  ....  126,815,000 

“  “  that  bills  on  England,  Belgium, 

and  Holland  contributed  .  .  47,338,000 

Total . £199,645,000 

Here,  however,  we  must  repeat  that  the  Paris  bankers  who 
sold  drafts  on  Germany  were  obliged  to  some  extent  to  remit 
cash  to  meet  them.  On  this  point  M.  Leon  Say  goes  into 
calculations  which  we  will  mention  presently ;  for  the  mo¬ 
ment  it  will  suffice  to  say  that,  according  to  his  view,  the 

22 


838 


ECONOMIC  HISTORY. 


effective  transmission  of  bullion  from  France  to  Germany, 
through  private  hands,  from  1871  to  1873,  did  not  exceed 
<£8, 000, 000  for  the  purposes  in  view  here.  He  acknowledges, 
as  will  be  seen,  that  the  entire  exportation  of  French  gold 
during  the  three  years  reached  (probably)  £40,000,000;  but 
still  he  expresses  the  opinion  that  £8,000,000  were  all  that 
was  required,  as  a  balance,  to  cover  the  French  bills  on 
Berlin.  Of  course  this  is  a  question  which  nobody  can  de¬ 
cide  ;  but,  to  lookers  on,  it  does  seem  somewhat  contrary  to 
the  probabilities  of  such  a  case  that  this  sum  can  have  been 
sufficient.  It  may,  perhaps,  have  been  enough,  as  M.  Say 
says,  to  balance  accounts  in  the  long  run,  but  it  is  difficult 
to  believe  that  it  was  not  considerably  exceeded  while  the 
operation  was  under  execution.  Furthermore,  M.  Leon  Say 
makes  a  mistake  of  £10,000,000  in  his  account,  as  we  shall 
show,  and  for  that  reason,  we  believe  that  £18,000,000 
instead  of  £8,000,000  were  required,  so  putting  the  whole 
total  of  French  bullion  temporarily  used,  including  the 
£20,000,000  of  the  Government,  at  about  £38,000,000,  or 
a  little  more  than  one-sixth  of  the  entire  sum  to  pay.  As 
this  is  certainly  a  maximum,  it  follows  that  France  got  out 
of  this  great  debt  with  a  payment  of  only  18  per  cent  of  it, 
at  the  outside,  in  her  own  money.  And  there  is  good  rea¬ 
son  to  suppose  that  all  the  gold  exported  by  her  has  come 
back,  and  that  her  reserves  of  bullion  are  reconstituted  at 
present  as  they  were  before  the  war. 

And  now  we  can  approach  the  most  important  and  inter¬ 
esting  point  in  the  whole  transaction.  How  came  it  that 
£170,000,000  of  bills  could  be  got  at  all  ?  We  have  given  a 
general  answer  to  the  question  at  the  commencement  of  this 
article;  we  will  now  consider  it  more  in  detail,  partly  with 
the  aid  of  M.  Leon  Say’s  report,  partly  by  reference  to  other 
sources  of  information.  It  appears,  as  might  have  been  ex¬ 
pected,  that  various  measures  were  employed  by  the  French 
Government  in  order  to  render  possible  the  collection  of 
such  a  huge  mass  of  paper.  In  the  first  place,  particular 
facilities  and  temptations  were  offered  to  foreigners  to  in¬ 
duce  them  to  subscribe  to  the  two  loans;  commissions  vary- 


THE  FRENCH  INDEMNITY. 


339 


ing  from  £  to  1  per  cent  were  offered  to  them,  the  object  be¬ 
ing  to  acquire  the  power  of  drawing  on  them  for  the  amount 
of  their  instalments.  Secondly,  everything  was  done  to  en¬ 
courage  anticipated  payments  of  those  instalments,  so  as  to 
hasten  the  dates  at  which  they  could  be  drawn  for.  Thirdly, 
as  some  fear  was  felt  that  the  second  loan  might  possibly  not 
be  eagerly  subscribed,  coming  as  it  did  so  immediately  after 
a  previous  issue  which  was  not  quite  paid  up,  it  was  thought 
desirable  to  get  a  portion  of  it  guaranteed  by  bankers.  But 
in  order  not  to  risk  giving  to  those  bankers  a  large  commis¬ 
sion  for  nothing,  it  was  stipulated  with  them,  as  a  part  of 
the  arrangement,  that  they  should  supply  the  Treasury  with  a 
fixed  quantity  of  foreign  bills.  By  the  two  former  plans  of 
action  the  immense  amount  of  X 70, 920,000  of  drafts  on 
other  countries  was  obtained,  X 15, 960, 000  of  which  were  on 
account  of  the  first  loan,  and  X54, 960,000  on  account  of  the 
second ;  and  it  may  be  remarked  at  once,  before  we  proceed, 
that  though  this  figure  supplies  decisive  evidence  of  the  fact 
that  at  least  one  third  of  the  two  great  loans  was  paid  up- 
by  foreign  subscribers,  it  is  certain  that  nearly  the  entire 
amount  has  been  bought  back  since,  and  that  almost  the 
whole  of  the  new  stocks  is,  at  the  present  moment,  in  French 
hands.  By  the  third  plan  the  bankers  who  formed  the  syn¬ 
dicate,  and  it  may  be  mentioned  that  fifty-five  of  the  first 
houses  in  Europe  were  associated  for  the  purpose,  engaged 
to  supply  X 28, 000, 000  of  paper.  Consequently,  by  these 
admirably  devised  schemes,  X  98, 920, 000  of  drafts  were 
successively  procured,  and  the  exact  quantity  to  be  bought 
in  the  open  market  was  reduced  to  X  71, 032, 000. 

It  must,  however,  be  observed  that,  though  we  can  regard 
these  drafts  on  foreign  countries  for  loan  instalments  as  a 
special  product  of  the  occasion,  and  are  therefore  justified  in 
counting  them  apart,  the  same  cannot  anyhow  be  said  of  the 
X  28, 000, 000  of  bills  furnished  by  the  syndicate  of  bankers. 
The  latter  were  evidently  composed  of  ordinal  commer¬ 
cial  paper,  and  consequently  must  be  added  to  the  total 
which  had  to  be  supplied  from  commercial  sources  proper, 
so  putting  that  total  at  X99,032,000.  Now  bills  of  this 


340 


ECONOMIC  HISTORY. 


sort  necessarily  imply  an  effective  counter-value  of  some 
kind;  so,  as  we  have  already  seen  that  at  the  outside  only 
£18,000,000  of  that  counter-value  was  supplied  in  bullion, 
there  remained  at  least  £81,032,000  of  bills  which  must 
necessarily  have  been  based  on  ordinary  trading  or  financial 
operations.  What  were  those  operations?  Very  often  the 
general  character  of  a  hill  is  indicated  on  its  face ;  but  in 
this  case  a  test  of  that  kind  could  not  be  applied,  not  only 
because  there  were  so  many  hills  to  handle  that  a  serious  ex¬ 
amination  of  their  nature  was  impracticable  (there  were  in 
all  one  hundred  and  twenty  thousand  of  them,  of  every  con¬ 
ceivable  amount,  from  £40  to  £200,000),  but  also  because 
every  possible  kind  of  business  transaction  must  have  been 
represented  in  that  accumulation  of  securities  from  all  parts 
of  the  world.  Bank  credits,  circulation  bills,  settlements  for 
goods  delivered,  remittances  on  account  of  future  purchases, 
drafts  against  the  coupons  of  shares  and  stocks,  special  paper 
created  for  the  occasion, —  all  these  forms,  and  many  others, 
too,  were,  according  to  M.  Leon  Say,  included  in  the  collec¬ 
tion.  It  was  not  possible  to  seek  out  in  detail  the  origins  and 
meanings  of  such  a  varied  mass ;  but  we  may  take  M.  Say’s 
general  description  of  it  to  be  true,  not  only  because  it  cor¬ 
responds  with  probabilities  and  experience,  but  also  because 
he  was  himself  Minister  of  Finance  during  a  part  of  the 
operation,  and  has  therefore,  a  personal  knowledge  of  its 
main  circumstances.  Researches,  liowrever,  which  could  not 
be  attempted  with  the  bills  themselves,  may  be  practically 
and  usefully  pursued  if  they  are  directed  towards  the  general 
signs  and  symptoms  of  the  financial  state  of  France.  It  is 
probable  that  a  relatively  small  amount  of  bills  was  created 
specially  to  be  sold  to  the  French  Government.  We  may, 
indeed,  take  the  supposed  £18,000,000  of  exported  bullion 
as  indicating  the  approximate  extent  of  uncovered  or 
manufactured  paper;  all  the  rest  was  evidently  based  on 
mercantile  transactions.  Now,  we  know  that  mercantile 
transactions  imply  the  delivery  of  property  of  some  kind, 
and  that  the  two  main  forms  of  property,  commercially,  are 
merchandise  and  stocks.  It  is  therefore  necessary,  in  order 


THE  FRENCH  INDEMNITY. 


341 


to  arrive  at  an  idea  upon  the  question,  to  glance  at  the  ac¬ 
tual  position  of  France  in  her  dealings  with  other  nations  in 
these  two  values. 

We  have  already  alluded  to  the  development  of  French 
trade,  and  to  the  general  influence  of  that  development  on 
the  payment  of  the  war  indemnity  as  a  whole ;  but  we  must 
go  into  a  few  figures  here  in  order  to  make  the  bearings 
of  the  subject  clear.  The  value  of  the  foreign  commerce 
of  France  —  importations  and  exportations  together  — 
was  <£257,000,000  in  1871,  £293,000,000  in  1872,  and 
£301,000,000  in  1873.  Now  it  will  be  at  once  recognized 
that  the  amount  of  bills  necessitated  by  this  quantity  of 
commerce  supplied  a  solid  foundation  for  carrying  the  addi¬ 
tional  paper  whose  origin  we  are  now  seeking  to  discover. 
M.  Say  is  of  opinion  that  scarcely  any  part  of  the  indemnity 
bills  was  furnished  by  the  current  commercial  trade  of  the 
country ;  but,  as  we  have  just  seen  that  the  quantity  required 
from  trading  sources  was  £81,000,000,  or  about  £40,000,000 
per  annum,  it  does  seem  to  be  possible,  notwithstanding  his 
contrary  impression,  that  some  portion  of  that  relatively 
reduced  quantity  may  have  been  found  in  the  ordinary  com¬ 
mercial  movement.  For  instance,  it  may  reasonably  be 
argued  —  as  indeed  M.  Say  himself  admits  —  that  bills 
drawn  against  French  exports  to  Germany  or  England  would 
be  included,  to  some  extent,  among  those  which  were  offered 
to  the  Government.  There  seems  to  be  no  reason  why  this 
should  not  have  been  so. 

But  if  M.  Say  considers  that  the  habitual  commercial 
paper  of  France  has  not  been  of  much  service  to  the  Treas¬ 
ury  in  its  conduct  of  this  operation,  he  holds  a  totally  differ¬ 
ent  opinion  with  reference  to  the  influence  of  the  foreign 
investments  of  the  French  people.  What  he  says  on  this 
subject  is  new  and  curious,  and  is  well  worth  repeating. 

He  begins  by  stating,  with  an  appearance  of  much  truth 
and  reason,  that  for  many  years  before  the  war,  French 
capital  was  being  continuously  invested  in  foreign  securities ; 
that  the  sums  so  placed  have  been  estimated  by  different 
economists  at  from  £30,000,000  to  £60,000,000  a  year. 


342 


ECONOMIC  HISTORY. 


Here,  however,  before  we  follow  out  his  argument,  we  must 
open  a  parenthesis,  and  observe  that  if  even  the  smaller  of 
these  figures  is  exact,  the  computation  of  £80,000,000  of 
annual  savings,  which  was  alluded  to  at  the  commencement 
of  this  article,  must  be  altogether  wrong.  It  is  manifestly 
inadmissible  that  France  can  have  been  investing  in  foreign 
countries  three  eighths  of  her  whole  net  yearly  profits. 
Consequently,  we  may  legitimately  suppose  that  the  popular 
impression  about  the  £80,000,000  is  a  delusion,  and  that 
France  is  in  reality  laying  by  a  vast  deal  more  than  that. 
If  so,  the  ease  and  speed  with  which  she  has  recovered  from 
the  war  would  be  comprehensibly  explained.  M.  L6on  Say 
goes  on  to  tell  us  that  French  investments  in  foreign  stocks 
amounted  in  1870  to  so  large  a  total  that  the  dividends  on 
them  represented,  at  that  date,  about  £25,000,000  a  year, 
for  which  sum  drafts  on  other  countries  were  of  course  put 
into  circulation  by  its  French  proprietors.  Furthermore, 
the  revenues  of  the  strangers  who  live  in  France  come  to 
them  principally  from  their  own  country;  and  it  is  estimated 
that  before  the  war  £10,000,000  or  £12,000,000  of  such 
incomes  were  drawn  for  annually  in  the  same  way.  Conse¬ 
quently,  on  this  showing  it  would  appear  that  somewhere 
about  £35,000,000  or  £40,000,000  of  French  drafts  on  for¬ 
eign  countries  were  created  every  year  from  those  two 
sources.  It  is,  however,  certain  that  this  quantity  has 
diminished  since  the  war,  by  the  departure  of  some  of  the 
strangers  who  used  to  live  in  France,  and  also  by  the  sale, 
in  order  to  provide  funds  for  subscription  to  the  two  new 
loans,  of  some  of  the  foreign  securities  held  in  France.  But 
M.  Ldon  Say  considers  that  the  annual  diminution,  on  both 
heads  together  docs  not  exceed  £4,000,000,  and  that  at  least 
£30,000,000  of  paper,  representing  cash  due  to  France  on 
account  of  incomes  from  abroad,  irrespective  of  commerce 
properly  so  called,  were  drawn  in  1871  and  1872.  In  sup¬ 
port  of  these  considerations,  he  mentions,  among  other 
facts,  that  in  1868  and  1869  the  coupons  paid  in  Paris  on 
Italian  stock  alone  amounted  to  £3,400,000;  while  in  1872 
and  1873  they  fell  to  £2,400,000.  On  this  one  security, 


THE  FRENCH  INDEMNITY. 


343 


therefore,  which  is,  however,  probably  held  in  France  in 
-  larger  proportions  than  any  other  foreign  stock,  the  diminu¬ 
tion  of  income  since  the  war  amounts  to  £1,000,000.  With 
these  figures  and  probabilities  before  him,  he  concludes  by 
expressing  the  confident  opinion  that,  as  French  purchases 
of  foreign  stocks  have  ceased,  to  a  great  extent  at  least,  since 
18T0,  and  as  remittances  of  French  money  to  pay  for  such 
purchases  have  consequently  ceased  as  well,  the  drafts  on 
other  countries  for  coupons  and  revenues  became  entirely 
disposable  for  transmission  to  Berlin,  and  that  it  is  here  that 
the  main  explanation  lies  of  the  facility  with  which  the 
bills  were  found.  This  theory  is  ingenious,  and  it  is  proba¬ 
bly  in  great  part  true. 

The  movement  of  the  precious  metals  forms  a  separate 
element  of  the  subject,  and  one  that  is  not  easy  to  trace  out ; 
for  in  France,  as  in  most  other  countries,  the  public  returns 
of  the  international  trade  in  specie  are  very  incomplete. 
We  know  how  much  gold  and  silver  are  raised  from  mines, 
and  how  much  thereof  is  coined  by  each  country ;  but  we  are 
very  ill  informed  as  to  what  becomes  of  them  when  once  they 
have  issued  from  the  mint.  On  this  head  also,  however,  M. 
Leon  Say  has  collected  some  valuable  facts.  The  Custom¬ 
house  Reports  inform  us  that  during  the  three  years  from 
18T1  to  1873  <£53,400,000  of  bullion  were  exported,  and 
£50,480,000  were  imported;  on  this  showing,  therefore,  the 
loss  of  bullion  was  only  £2,920,000.  But  as  private  infor¬ 
mation  gave  good  reason  to  believe  that  the  amounts  must 
have  been  in  reality  considerably  larger,  calculations  have 
been  made  in  order  to  arrive  at  a  more  correct  conclusion. 
It  appears,  from  official  publications,  that  the  stock  of  gold 
and  silver  in  the  Christian  world  is  supposed  to  have  in¬ 
creased  by  £371,000,000  from  1849  to  1867;  but  the  aug¬ 
mentation  has  not  occurred  in  both  the  metals,  it  has  taken 
place  in  gold  only;  the  quantity  of  gold  is  greater  by 
£428,000,000,  while,  in  consequence  of  exportations  to 
Asia,  the  quantity  of  silver  has  diminished  by  £57,000,000. 
Now  out  of  this  £428,000,000  of  new  gold,  France  alone,  in 
the  first  instance,  received  more  than  half ;  at  least  we  are 


344 


ECONOMIC  HISTORY. 


justified  in  supposing  so,  from  the  fact  that,  during  the  same 
period  the  Paris  mint  converted  <£230,000,000  of  bar  gold 
into  French  coin.  Of  course  this  quantity  of  gold  did  not  re¬ 
main  permanently  in  France ;  its  whole  value  was  not  added 
in  reality  to  the  general  French  stock  of  metal ;  as  gold 
arrived  in  France  silver  went  away ;  indeed  it  is  imagined 
that,  out  of  the  £200,000,000  of  silver  which  have  been  coined 
in  France  since  the  year  1800  only  £40,000,000  remained 
in  the  country  in  1869.  It  is,  however,  calculated  that  the 
£100,000,000  of  hard  cash,  gold  and  silver  together,  which 
were  said  to  really  belong  to  France  in  1848,  have  doubled 
since;  and  M.  Wolowski,  who  is  regarded  as  an  authority 
on  such  questions,  declared  in  the  French  Chamber,  on  4tli 
February  last  that,  in  his  opinion,  the  national  stock  now 
ranges  between  £200,000,000  and  £250,000,000. 

But  whatever  be  the  interest  of  these  computations,  and 
useful  as  it  may  be  to  count  up  the  amount  of  bullion  which 
has  come  into  France,  we  must  look  elsewhere  for  informa¬ 
tion  as  to  the  quantity  of  it  which  the  consequences  of  the 
war  took  out.  We  know  that  the  German  mint  melted 
down,  for  its  own  coinage,  £33,880,000  of  French  napoleons. 
It  is  also  known,  says  M.  Leon  Say,  that  the  Bank  of  Eng¬ 
land  bought  nearly  £8,000,000  of  the  same  sort  of  money 
between  1870  and  1873.  Here,  therefore,  we  can  trace  the 
passage  out  of  France,  since  the  war,  of  nearly  £42,000,000 
of  her  gold.  But,  as  Germany  drew  from  London  £1,680,000 
of  the  napoleons  which  she  put  into  the  furnace,  it  may  be 
that  that  sum  was  included  in  the  £8,000,000  of  the  Bank 
of  England,  and  is  therefore  counted  twice.  For  this  reason 
the  amount  really  sent  to  Germany  and  England  may  be  put 
at  £40,000,000.  M.  Ldon  Say  adds,  that  the  Bank  of  Am¬ 
sterdam  bought  a  further  £3,600,000  of  French  gold;  but, 
as  he  fancies  that  this  may  not  have  come  direct  from 
France,  he  does  not  add  it  to  the  total,  and  he  holds  to 
£40,000,000  as  representing  probably  the  effective  loss  of 
gold  which  France  had  to  support  after  the  war.  Of  this 
sum  £10,920,000  were  exported  to  Berlin,  as  we  have  al¬ 
ready  shown,  by  the  French  Government  itself;  the  other 


THE  FRENCH  INDEMNITY. 


345 


£29,080,000  were  consequently  carried  out  by  private  firms 
for  transmission  to  Berlin,  and  for  various  other  purposes. 
Silver,  however,  arrived  in  considerable  quantities  to  replace 
the  gold.  <£9,500,000  of  silver  were  coined  in  Paris  be¬ 
tween  1870  and  1873;  and  the  Custom-house  returns,  which 
are  almost  always  below  the  truth,  show  an  importation  of 
<£12,160,000  of  it.  From  all  this,  M.  Say  concludes  that 
<£40,000,000  of  gold  left  France;  that  £12,000,000  of  silver 
came  to  her;  and  that  the  X 28, 000, 000  of  difference  between 
the  two  represents  the  real  total  loss  of  bullion  which  the 
war  entailed. 

But  in  making  this  calculation  M.  Leon  Say  commits  a 
most  wonderful  mistake ;  he  entirely  omits  to  take  account 
of  the  <£9, 572, 000  of  silver  which  the  French  Government 
sent  to  Berlin,  and  which  must,  of  course,  be  added  to  the 
out-going.  When  this  strange  error  is  corrected,  the  loss 
becomes,  not  £28,000,000,  but  £38,000,000,  of  which  the 
Government  exported  £20,000,000,  leaving  apparently 
£18,000,000  instead  of  £8,000,000,  as  the  sum  contributed 
by  private  bankers.  This  difference  of  £10,000,000  in  the 
issue  of  the  calculation  gives  some  value  to  another  com¬ 
putation  which  M.  Ldon  Say  has  made,  but  which  would 
have  had  no  foundation  if  this  error  had  not  existed.  He 
says,  probably  with  some  truth,  that  the  quantity  of  money 
in  circulation  in  a  country  remains  usually  at  the  same 
general  total  during  the  same  period,  whatever  be  the  nature 
of  the  various  elements  which  compose  it.  He  then  goes 
on  to  argue  that  as  the  issue  of  French  bank-notes  was 
£44,000,000  higher  in  September,  1873,  than  in  June,  1870, 
that  increase  ought  to  approximately  indicate  the  amount  of 
metal  withdrawn  in  the  interval  from  circulation,  and  re¬ 
placed  by  notes.  But  according  to  his  theory,  that  amount 
of  metal  did  not  exceed  £28,000,000,  leaving  an  excess  of 
£16,000,000  of  notes,  which  excess  he  explains  by  saying 
that  it  represents  an  equal  sum  in  gold  which  the  French 
people  had  hidden  away.  Now  everybody  knows  that  the 
lower  classes  of  the  French  people  do  hide  money,  do 
“ thesaurise, ”  as  they  say;  but  such  an  explanation  of  the 


346 


ECONOMIC  HISTORY. 


missing  <£16,000,000  is  so  purely  imaginary  that  it  cannot 
merit  any  serious  credit.  The  theory  assumes,  however,  a 
very  different  form  when  the  error  of  the  £10,000,000 
is  corrected.  In  that  case  we  have  an  extra  issue  of 
£44,000,000  in  bank-notes,  corresponding  to  a  loss  of 
£88,000,000  in  gold  and  silver;  and  there  the  two  figures 
get  sufficiently  close  to  each  other  for  it  to  be  possible  that 
there  really  is  some  relationship  between  them,  without  be¬ 
ing  forced  to  resort  to  the  possible  but  improbable  solution 
of  thesaurising. 

Consequently,  with  all  these  various  considerations  be¬ 
fore  us,  it  seems  reasonable  to  suppose  that  the  natures  of 
the  bills  employed  to  pay  the  war  indemnity  were  of  three 
main  classes,  and  were  grouped  approximately  in  the  follow¬ 


ing  proportions :  — 

Drafts  for  foreign  subscriptions  to  the  loans  .  £70,920,000 

Bills  against  French  bullion  specially  exported  18,000,000 
Commercial  bills  and  drafts  for  dividends  and 
revenues  from  abroad .  81,032,000 


General  total  of  bills . £169,952,000 


Before  we  proceed  to  sum  up  the  case,  and  to  try  to  draw 
from  it  the  teaching  it  contains,  there  is  one  more  detail 
which  is  worth  explaining. 

We  have  alluded  to  the  coining  in  Paris  of  a  certain  quan¬ 
tity  of  Hamburg  silver.  To  make  the  story  of  it  clear,  it  is 
necessary  to  remind  our  readers  that,  according  to  the  con¬ 
stitution  of  the  Bank  of  Hamburg,  which  dates  from  1619, 
accounts  were  kept  by  it  in  a  money  called  marc-banco,  and 
credits  were  opened  by  it  in  that  money  on  the  deposit  of 
silver,  coined  or  uncoined,  the  value  of  that  silver  being 
calculated  pure.  By  degrees  the  marc-banco,  though  only  an 
imaginary  money,  grew  to  be  the  universal  denominator  em¬ 
ployed  in  the  home  and  foreign  business  of  Hamburg;  it  ac¬ 
quired  an  importance  greater  than  that  of  the  effective  money 
of  many  German  States.  But  when  the  Empire  was  estab¬ 
lished,  and  it  was  decided  to  introduce  a  gold  standard  into 
Germany,  it  became  essential  to  suppress  the  marc-banco, 


THE  FRENCH  INDEMNITY. 


847 


for  it  had  the  double  defect  of  representing  silver  and  of  form¬ 
ing  a  separate  value  outside  German  monetary  unity.  So  it 
was  abolished  by  law  and  ordered  to  disappear,  —  the  plan 
adopted  being  that  the  Bank  of  Hamburg  should  liquidate 
its  deposits  by  paying  off,  in  pure  silver,  the  marcs-banco  in 
circulation.  It  was,  however,  stipulated  that  this  right 
should  cease  on  15th  February,  1873,  and  that  after  that 
day,  all  persons  who  held  securities  in  marcs-banco  should 
lose  the  old  right  of  receiving  pure  silver,  and  should  only  be 
entitled  to  half  a  thaler  for  each  marc-banco,  that  being  the 
value  of  the  silver  represented  by  the  latter.  Now  the 
French  Treasury  had  bought,  as  we  have  seen,  £  21, 000, 000 
of  bills  in  marcs-banco,  and  consequently  possessed  the  right 
of  claiming  silver  for  such  of  them  as  fell  due  before  loth 
February,  1873,  while  all  the  rest  from  that  date  were  paya¬ 
ble  in  thalers.  The  thaler  was  “  liberative,  ”  while  the 
marc-banco  was  not;  but  the  pure  silver  which  the  marc- 
banco  represented  could  be  coined  into  five-franc  pieces,  and 
be  delivered  to  the  German  Government  at  the  rate  of  3 
francs  75  centimes  per  thaler.  The  result  was  that,  being 
by  far  the  largest  holder  of  marcs-banco  paper,  the  French 
Treasury  was  able  for  a  time  to  control  the  Hamburg  market, 
and  it  naturally  used  for  its  own  advantage  the  power  which 
this  position  gave  it.  The  Hamburg  Bank  was  utterly  una¬ 
ble  to  deliver  the  quantity  of  silver  for  which  France  held 
acceptances  in  marcs-banco;  it  was  absolutely  in  the  hands 
of  the  French  Minister  of  Finance ;  that  functionary  appears, 
however,  to  have  acted  very  fairly,  —  to  have  only  asked  for 
silver  in  moderation,  and  to  have  profited  by  his  power 
solely  to  obtain  conversions  into  thalers  on  good  condi¬ 
tions.  The  result  was,  as  we  have  said,  that  <£3, 732, 000  of 
Hamburg  silver  came  to  the  Paris  mint,  partly  through  Gov¬ 
ernment  importations  on  marcs-banco  bills,  partly  through 
private  speculators,  who  followed  the  example  of  the  Treas¬ 
ury,  and  pressed  the  Hamburg  Bank  for  metal. 

Such  are,  in  a  condensed  form,  the  essential  features  of 
the  history  of  this  extraordinary  operation ;  and  now  that  we 
have  completed  the  account,  we  need  no  longer  delay  the 


348 


ECONOMIC  HISTORY. 


expression  of  our  admiration  of  the  consummate  ability  with 
which  it  was  conducted.  Its  success  may  be  said  to  have 
been,  in  every  point,  complete ;  we  cannot  detect  one  sign  of 
a  grave  hitch  or  of  a  serious  error  in  it.  It  does  the  highest 
honor  to  the  officials  of  the  French  Treasury,  and  proves  that 
they  possess  a  perfect  knowledge  of  exchange  and  bank¬ 
ing  both  in  their  minutest  details  and  in  their  largest 
applications. 

When  we  look  back  upon  the  subject  as  a  whole,  three 
great  facts  strike  us  in  it :  the  first,  that  France  is  vastly 
rich ;  the  second,  that  the  trade  of  Europe  has  attained  such 
a  magnitude  that  figures  are  ceasing  to  convey  its  measure  ; 
the  third,  that  the  aggregate  commercial  action  of  nations  is 
a  lever  which  can  lift  any  financial  load  whatever.  As  we 
see  the  transaction  now,  with  these  explanations  of  its  com¬ 
position  before  us,  we  cannot  fail  to  recognize  that  it  has 
been  rather  European  than  purely  French.  All  purses 
helped  to  provide  funds  for  it ;  all  trades  supplied  bills  for  it. 
In  every  previous  state  of  the  world’s  commerce  such  an 
operation  would  have  been  impossible;  fifty,  thirty,  twenty 
years  ago,  it  would  have  ruined  France  and  have  disordered 
Europe;  in  our  time  it  has  come  and  gone  without  seriously 
disturbing  any  of  the  economic  conditions  under  which  we 
live.  France,  out  of  her  own  stores,  has  quietly  transported 
to  Berlin  a  quantity  of  bullion  larger  than  the  whole  ordi¬ 
nary  stock  of  the  Bank  of  England ;  and  yet  she  shows  no 
sign  of  having  lost  a  sovereign.  She  has  paid  in  her  bank¬ 
notes  for  £170,000,000  of  transmission  paper,  and  yet  the 
quantity  of  her  bank-notes  in  circulation  is  now  steadily 
diminishing.  Such  realtities  as  these  would  be  altogether 
inconceivable  if  we  did  not  see  their  cause  behind  them; 
that  cause  is  simple,  natural,  indisputable ;  its  name  is  the 
present  situation  of  the  world’s  trade.  The  vastness  of  that 
trade  explains  the  mystery. 

But  yet  with  these  advantages  to  help  it,  the  operation 
had,  in  addition  to  its  enormous  size,  certain  special  diffi¬ 
culties  to  contend  with.  As  one  example  it  may  be  men¬ 
tioned  that  among  the  elements  of  perturbation  and  of 


THE  FRENCH  INDEMNITY. 


349 


consequent  impediments  to  remittance,  the  French  Govern¬ 
ment  had  to  keep  in  view  the  fact  that,  at  the  very  moment 
when  it  needed  all  the  monetary  facilities  it  could  obtain, 
the  German  Government  was  locking  up  gold  in  its  cellars, 
in  order  to  provide  metal  for  the  new  coinage  it  was  pre¬ 
paring.  This  was  a  most  unlucky  coincidence ;  but  it  ex¬ 
isted,  and  it  had  to  be  met.  The  German  plan  was  to  hold 
back  the  issue  of  the  new  money  until  £30,000,000  of  it 
were  ready  to  be  exchanged  for  the  old  silver  currency ;  con¬ 
sequently,  no  silver  could  be  expected  to  leave  Germany 
until  some  months  after  the  date  at  which  the  gold  had  been 
brought  in  there ;  and  during  the  interval  France  knew  that 
she  must  suffer  from  the  withdrawal  of  so  much  bullion  from 
the  general  market.  But  she  found  assistance  in  an  unex¬ 
pected  way ;  silver  did  flow  back  to  her  at  once  from  Ger¬ 
many,  without  waiting  for  the  issue  of  the  new  gold  currency. 
France  paid  Germany  £9,572,000  in  French  silver;  but  this 
was  of  no  use  to  the  latter;  on  the  contrary,  it  was  an  em¬ 
barrassment  to  her,  for  she  was  on  the  point  of  exporting  a 
quantity  of  her  own  silver,  which  would  become  superfluous 
as  soon  as  the  new  gold  got  into  circulation.  So,  for  this 
reason,  a  considerable  portion  of  the  French  five-franc  pieces 
came  back  immediately  to  France,  and  helped  to  reconstitute 
her  store. 

And  all  the  other  difficulties  were,  more  or  less,  like  this 
one.  At  first  sight  they  looked  grave  and  durable,  but  they 
diminished  or  disappeared  as  soon  as  they  were  seriously 
attacked;  the  whole  thing  turned  out  to  be  an  astonishing 
example  of  obstacles  overrated.  The  unsuspected  wealth  of 
France,  assisted  by  an  extent  of  general  commercial  dealings 
which  was  more  unsuspected  still,  managed  to  get  the  better 
of  all  the  stumbling-blocks  and  impossibilities  which  seemed 
to  bar  the  road.  France  has  lost  £400,000,000,  one  half  of 
which  she  has  delivered  to  her  enemy,  and  yet  she  is  going 
on  prospering  materially  as  if  nothing  at  all  had  happened. 
But  it  is  now  quite  clear  that  she  never  could  have  managed 
all  this  alone;  she  could  have  found  the  money,  but  never 
could  she,  single-handed,  have  carried  it  to  Germany.  It  is 


850 


ECONOMIC  HISTORY. 


there,  far  more  than  in  subscriptions  to  her  loans,  that  the 
world  has  really  helped  her ;  she  has  bought  back  the  stock 
that  foreigners  subscribed  for  her,  but  she  could  not  do  so 
without  the  bills  they  sold  her.  If  she  had  been  left  to  her 
•  own  resources  for  the  transport  of  the  indemnity  to  Berlin 
she  would  probably  have  been  forced  to  send  two  thirds  of  it 
in  bullion,  and  to  empty  her  people’s  pockets  for  the  pur¬ 
pose ;  the  vastness  ~of  the  world’s  trade  and  the  unity  of  in¬ 
terests  which  commerce  has  produced,  permitted  her  to  use 
other  nations’  means  of  action  instead  of  her  own. 

Viewed  in  this  light,  the  payment  of  the  five  milliards 
becomes  an  enormous  piece  of  admirably  well-arranged  in¬ 
ternational  banking,  in  which  nearly  all  the  counting-houses 
of  Northern  Europe  took  a  share.  That  definition  of  it  is 
worth  knowing,  and  we  may  be  glad  that  the  information 
given  in  M.  Say’s  report  has  enabled  us  to  arrive  at  it. 


APPLICATION  OF  THE  INDEMNITY. 

From  Kolb’s  “  The  Condition  of  Nations  ”  (Trans,  by  Mrs. 

Brewer),  pp.  290-299. 1 

When  the  North  German  Confederacy  was  formed,  not¬ 
withstanding  the  transfer  of  the  proceeds  of  the  customs  and 
of  other  indirect  imposts  to  the  Confederacy,  and  in  spite  of 
considerable  contributions  by  the  different  States,  the  reve¬ 
nues  did  not  suffice  to  cover  the  expenditure,  especially  that 
of  the  establishment  of  a  larger  sea  force.  A  deficit  was  the 
result,  and  loans  had  to  be  raised. 

In  the  year  1868  the  debt  of  the  Confederacy 


amounted  to . £540,000 

In  1809  to . ' . 1,312,338 

And  in  1870  it  rose  to .  1,735,743 

While  in  1871  it  was .  1,988,882 


The  war  made  the  contraction  of  a  further  debt  unavoida¬ 
ble,  both  for  the  States  of  the  North  German  Confederacy 

1  London :  George  Bell  &  Co.,  1880. 


THE  FRENCH  INDEMNITY. 


851 


as  well  as  for  those  of  South  Germany.  The  sum  immedi¬ 
ately  expended  on  the  war  must  have  amounted  to  about 
<£51,000,000.  The  result  of  the  war  led  to  a  complete  revo¬ 
lution  in  the  condition  of  finance.  We  extract  the  following 
data  from  the  memorandum  which  was  laid  before  the  Diet 
by  the  Imperial  Chancellor  on  February  18,  1874,  with 
regard  to  the  application  of  the  French  war  contribution :  — 
The  Receipts  amounted  to  — 

1.  War  contribution  by  France . £200,000,000 

2.  Interest  upon  this  till  the  payment  of  the 

debt .  12,047,678 


Total . £212,047,678 

3.  Added  to  this,  contribution  of  the  City  of 

Paris .  8,025,879 

4.  Customs  levied  in  France  and  local  contri¬ 

butions,  less  cost  of  collection,  so  far  as 
these  sums  were  not  employed  for  special 
military  purposes,  about .  2,609,133 


Total  receipts . £222,682,690 


Of  this  sum  £12,999,999  must  be  deducted  for  the  acqui¬ 
sition  of  railways  belonging  to  a  private  company  in  Alsace- 
Lorraine,  the  remainder  being,  therefore,  £209,682,691. 

Expenditures. 

1st.  Expenses  for  which  fixed  sums  were  granted  by  Im¬ 


perial  decrees,  namely:  — 

For  the  Imperial  Invalid  Fund . £28,050,000 

For  the  completion  of  German  fortresses  .  .  .  10,800,000 

For  fortresses  in  Alsace-Lorraine  .  .  .  .  .  6,037,642 

For  railroads  in  the  Imperial  Dominions,  par¬ 
ticularly  the  Wilhelm- Luxembourg  line  .  .  8,210,883 

For  Imperial  war  treasures,  to  be  kept  in  the 
Julius  tower  of  the  fortress  of  Spandau  .  .  6,000,000 

Compensation  for  the  decrease  in  the  revenue 
caused  by  alterations  in  the  management  of 

the  customs  and  taxes .  2,968,907 

Imperial  Treasury  fund,  for  the  administration 
of  the  marine,  and  for  unredeemable  advances 
for  the  management  of  the  Imperial  army  .  . 


1,503,000 


352 


ECONOMIC  HISTORY. 


For  gratuities  to  generals  for  distinguished  ser¬ 
vices  .  600,000 

For  aid  to  Germans  banished  from  France  .  .  300,000 

For  exercise  ground  for  the  Artillery-trial  Com¬ 
mission  .  206,250 

Expenditure  for  general  purposes  defrayed  by 
the  Imperial  Treasury  in  1870  and  1871,  and 
the  additional  outlay  for  troops  garrisoned-  in 
Alsace-Lorraine  till  the  end  of  1872  .  .  .  1,249,500 


Lastly,  £6,195,181  granted  by  an  Imperial  decree  of  July 
8,  1873;-  for  marine,  £4,206,783;  buildings  for  the  Diet, 
£1,200,000.  Supplemental  expenses  of  war,  including 
various  other  grants,  making  total  of  £72,116,704. 

To  this  must  be  added  those  outlays  the  amount  of  which 
depends  on  the  sum  required  for  the  attainment  of  the  object 
in  view.  They  may  be  estimated  as  follows :  — 


1.  Compensation  for  damages  by  war  and  for 

war . 

2.  Compensation  to  German  ship-owners  .  . 

3.  For  war  medals . 

4.  Invalid  pensions  in  consequence  of  the  war  of 

1870,  1871,  and  1872  . 

5.  Additional  for  payment  of  invalid  pensions, 

payable  out  of  the  Imperial  Invalid  Fund 
during  the  time  that  that  fund  was  not  per¬ 
fectly  established . 

6.  War  expenses  connected  with  the  French  War 

costs  indemnification,  which,  according  to 
Art.  5  of  the  decree  of  July  8,  1872,  are  to 
be  treated  as  common  charges,  viz. :  — 


£5,655,000 

840,000 

45,000 

1,513,466 


897,000 


(a)  For  arming  and  disarming  of  fortresses  .  1,477,078 

( b )  For  siege  material .  1,409,223 

(c)  For  marine  administration .  1,402,876 

(d)  For  temporary  arrangements  for  coast  de¬ 

fence,  etc .  148,121 

( e )  For  laying  down  and  repairing  railroads, 

etc.,  necessary  for  prosecuting  the  war  718,797 

(/)  For  the  establishment  and  working  of 
telegraphs  outside  the  limit  of  the  tele¬ 
graph  system .  30,418 


THE  FRENCH  INDEMNITY.  353 

(g)  For  temporary  civil  administration  in 
France,  especially  for  management  of 
railways  in  Alsace-Lorraine,  till  the 
end  of  1871 .  £563,057 


Further  for  services  which  from  July,  1, 

1871,  were  in  connection  with  the  war, 
viz. : — 

(h)  Management  of  the  post . .  33,750 

(i)  Management  of  telegraphs .  88,500 

(E)  Increased  expenditure  in  the  manage¬ 
ment  of  the  army,  over  and  above  that 

in  time  of  peace,  consequent  upon  the 


occupation  of  French  territory  .  .  .  3,150,000 

(l)  Further  estimates  for  general  expenses 
to  be  defrayed  by  the  Imperial  Treas¬ 
ury,  about .  37,500 


The  total  amount  of  expenditure  fund  to  be  deducted  from 
the  revenue  amounts  therefore  to  <£  90, 125, 544,  leaving  a 
remainder  of  <£119,057,197  to  be  divided.  It  is,  however, 
desirable  to  retain  a  moderate  reserve  for  possible  deficien¬ 
cies  in  the  estimated  receipts,  in  expectation  of  greater 
requirements  in  the  expenditure. 

The  sum  to  be  divided  may,  therefore,  be  estimated  in 
round  numbers  at  <£118,900,000.  Three  fourths  of  this 
were,  in  accordance  with  Article  6  of  the  statute  of  the  8th 
of  July,  1873,  set  apart  for  military  purposes,  in  the  propor¬ 
tion  specified  in  the  above  Article  6,  and  one  fourth  to  be 
divided  according  to  a  fixed  standard  of  1871.  The  sum  for 
division  is  shared  as  follows:  — 

1.  Bavaria . 

2.  Wiirtemberg . . 

3.  North  German  Confederation . 

4.  Baden . 

5.  Hesse . 

For  the  payment  of  expenses . 

About  £ 22, 500, 000  of  the  entire  war  contribution  were, 
in  obedience  to  Imperial  decrees,  applied  to  civil  objects, 

23 


£13,380,061 
4,275,130 
79,517,407 
5,019,977 
1,400,051 
<  917,850 

(  16,289,521 


854 


ECONOMIC  HISTORY. 


the  rest  for  purposes  of  war.  The  sums  which  fell  to  the 
separate  States  in  the  division  were  also  mostly  expended 
in  defraying  the  costs  of  war,  and  the  repayment  of  loans  for 
war. 

According  to  the  statute  of  2d  of  July,  1873,  £16,027,021 
of  the  sum  to  he  divided  were  set  apart  for  restoring  the 
army  to  a  war-footing  and  increasing  its  general  efficiency. 

We  find  from  a  report  of  the  Commission  on  the  State  debt, 
under  date  April,  1874,  that  the  Imperial  Invalid  Fund  pos¬ 
sessed  paper  of  nominal  value  — 


In  thalers . £23,081,742 

In  South  German  guldens .  933,187 

In  Dutch  guldens .  213,333 

In  English  pounds  sterling .  918,760 

In  dollars .  3,556,800 

And  in  banks .  393 


The  fortress  building  fund  possessed  at  the  same  time  a 
nominal  value  of  £5,229,795  in  effects,  and  a  capital  of 
£2,789,913  in  the  Prussian  bank.  .  .  . 


THE  LIQUIDATIONS  OF  1873-1876. 


355 


XIV. 

-  • 

THE  LIQUIDATIONS  OP  18T3-T6. 

From  Giffen’s  Essays  in  Finance,*  pp.  107-131. 

V\7HAT  are  the  characteristic  marks  of  the  great  depres- 
*  ^  sion  of  trade  during  the  last  three  or  four  years  ?  It 
is  now  ascertained  that  such  depressions  are  periodical.  They 
recur  at  tolerably  regular  intervals,  following  in  the  wake  of 
equally  regular  periods  of  great  prosperity  in  trade,  when 
everybody  makes  profits  or  seems  to  make  them.  The  alter¬ 
nation  has  no  doubt  its  roots  in  human  nature,  which  lends 
itself  to  an  ebb  and  flow,  an  action  and  reaction  in  affairs. 
The  depressions,  like  the  periods  of  prosperity  coming  before 
them,  have  also  many  features  in  common.  Just  as  the  pros¬ 
perity  is  shown  by  the  prevalence  of  good  credit,  an  active 
money  market,  and  a  high  range  of  prices  for  both  securities 
and  commodities,  so  the  depression  is  marked  by  a  low  range 
of  prices,  heavy  failures,  bad  credit,  and  consequently  a  slug¬ 
gish  money  market.  But  each  has  likewise  its  own  special 
features  and  incidents.  The  crisis  in  which  it  begins,  or 
which  it  produces,  indicates  some  special  development  of 
trade  at  the  time,  or  some  special  disease  in  it,  —  the  favorite 
business  of  a  country  changing  from  time  to  time,  and  a  con¬ 
stant  tendency  existing  to  go  to  an  extreme  with  the  momen¬ 
tary  fashion.  We  propose,  then,  to  inquire  what  are  these 
special  features  in  the  recent  depression,  —  this  proceeding 
being  likely,  it  is  obvious,  to  be  more  instructive  than  a  mere 
examination  and  record  of  those  features  which  most  depres¬ 
sions  have  in  common.  There  is  an  additional  reason  for 
this  course.  An  impression  prevails  that  the  present  stagna¬ 
tion  of  trade  is  unprecedented  in  intensity  and  duration,  and 

1  London :  George  Bell  and  Sons,  1880. 


856 


ECONOMIC  HISTORY. 


that  it  is  likely  to  be  permanent.  A  similar  impression  has 
often  been  found  to  prevail  at  such  times,  and  it  will  be  inter¬ 
esting  to  inquire  whether  it  is  now,  for  once,  well  founded,  or 
whether  in  reality  the  depression  is  not  much  less  than  those 
to  which  trade  has  often  been  subject,  and  is  not  as  likely  as 
any  other  to  terminate  in  a  new  period  of  prosperity. 

I. 

Endeavoring  to  answer  the  question  we  have  put,  wdiat  vrc 
are  first  struck  with,  in  a  general  survey  of  the  last  three  or 
four  years,  is  the  universality  of  the  depression.  Almost 
every  civilized  country  has  been  affected.  The  beginning  was 
in  1873,  with  the  great  Vienna  panic  and  crash  in  May  of 
that  year,  —  a  crash  which  wras  accompanied  by  immense 
agitation  throughout  Germany  and  in  England,  and  the  occur¬ 
rence  of  incidents  on  almost  every  European  Bourse,  wdiich 
only  stopped  short  of  panic.  Next  came  a  great  panic  and 
crash  in  the  autumn  of  1873  in  the  United  States,  perhaps  the 
greatest  event  of  the  kind  to  which  that  country,  though  it 
has  had  many  great  panics,  has  ever  been  subject.  This  was 
accompanied  by  a  renewal  of  agitation  in  England,  as  wrell  as 
generally  on  the  Continent,  as  the  rates  of  discount  in  Novem¬ 
ber,  1873,  significantly  prove.  At  that  date  the  minimum  bank 
rate  of  discount  was  in  London  no  less  than  nine  per  cent,  the 
maximum  being  two  and  three  per  cent  higher;  the  minimum 
in  Paris  and  Brussels  was  seven  per  cent ;  in  Berlin  and  Frank¬ 
fort,  five  per  cent;  Vienna,  five  per  cent;  and  Amsterdam, 
six  and  a  half  per  cent.  The  following  year  was  comparatively 
quiet,  but  it  wTas  marked  by  great  monetary  disturbances  in 
South  America,  and  by  a  great  fall  in  prices  both  at  home,  on 
the  Continent,  and  in  the  United  States.  In  1875  came  re¬ 
newed  disturbances  in  South  America,  a  renewal  of  agitation 
in  the  United  States  and  Germany;  and  then  the  Im  Thurn, 
Aberdare,  Collie,  Sanderson,  and  other  failures,  constituting 
the  commercial  crisis  of  that  year  in  England.  This  wras  in 
turn  succeeded  by  a  great  collapse  in  foreign  loans,  which  had 
been  heralded  and  partly  rehearsed  in  1873,  on  the  occasion 


THE  LIQUIDATIONS  OF  1873-1876. 


357 


of  the  bankruptcy  of  Spain,  and  of  which  the  conspicuous 
incident  now  was  the  non-payment  of  the  Turkish  debt  inter¬ 
est.  To  all  these  events  succeeded  renewed  depression  and 
stagnation  in  trade  at  home,  as  well  as  on  the  Continent,  the 
crisis  in  Russia  in  1876  being  very  marked,  and  the  whole 
continuing  till  it  seemed  to  have  a  fresh  cause  in  the  appre¬ 
hension  and  actual  outbreak  of  the  present  war.  Thus  the 
depression  has  been  widespread  and  general,  —  Italy,  Spain, 
and  France  perhaps  escaping  with  little  hurt,  but  Austria, 
Germany,  Russia,  the  United  States,  and  the  South  American 
countries  having  all  been  in  deep  distress. 

This  universality,  on  a  comparison  with  former  periods  of 
crisis,  may  be  in  fact  apparent  only,  arising  from  the  greatly 
increased  facilities  of  observation  at  the  present  day.  There 
never  was  a  time,  probably,  since  commerce  was  sufficiently 
advanced  in  more  countries  than  one  to  admit  of  crises,  in 
which  the  commercial  misfortunes  of  one  country  did  not  re¬ 
act  on  countries  with  which  it  did  business.  At  such  periods 
as  1825,  1837-39,  1857-58,  1861-62,  and  1866-68,  it  is  un¬ 
doubtedly  the  case  that  the  crisis  in  England  has  been  accom¬ 
panied  by  more  or  less  severe  crises  elsewhere,  —  France, 
America,  England,  Holland,  and  the  German  towns  on  the 
Elbe,  having  shared  each  other’s  misfortunes  more  or  less 
during  the  whole  period.  Now  the  crisis  is  felt  to  be  more 
extended,  because  we  are  immediately  informed  of  the  events 
in  most  distant  places,  because  we  see  at  once  the  association 
of  failures  at  centres  remote  from  each  other,  and  because  we 
also  see  at  once  the  effect  in  one  place  of  the  call  upon  it  to 
render  assistance  at  another  disturbed  centre  of  business.  But 
it  is  also  true  that  commercial  relations  are  themselves  far 
more  extended  than  was  the  case  before  railways  and  tele¬ 
graphs  ;  that  there  are  wide  regions  —  in  the  United  States, 
for  instance  —  which  could  not  have  been  the  subject  of  crisis 
twenty  or  thirty  years  ago,  because  they  were  unpeopled  ;  that 
such  countries  as  Austria  and  Russia  have  lately  shared  more 
largely  than  before  in  industrial  development ;  and  that  Ger¬ 
many  has  also  advanced  farther  in  the  path  which  makes  it 
possible  for  it  to  be  the  subject  of  a  commercial  crisis.  There 


358 


ECONOMIC  HISTORY. 


is  consequently  a  real  reason  for  the  greater  extension  of  the 
commercial  depression  of  the  last  three  years  as  compared 
with  anything  before  witnessed,  while  it  is  equally  true  that 
steam  and  telegraphs,  by  facilitating  communication,  have 
destroyed  the  natural  barriers  between  the  different  coun¬ 
tries  of  the  commercial  world.  The  London  money  market 
appears  to  be  the  great  equalizer  of  markets,  because  it  re¬ 
ceives  the  shock  of  every  important  business  event  through¬ 
out  the  world,  and  transmits  the  shock  of  what  it  feels  to 
every  other  centre.  But  whatever  the  nature  of  the  connec¬ 
tion,  it  is  certain  that  there  is  a  connection  between  com¬ 
mercial  crises  in  different  parts  of  the  world,  and  that  the 
wider  range  of  business  increases  the  possible  area  of  dis¬ 
aster  when  once  disaster  has  set  in. 

II. 

The  next  important  characteristic  of  the  depression,  and 
perhaps  the  most  important  characteristic  of  all,  appears  to 
be  that  the  conspicuous  industry  which  has  failed  is  that  of 
the  “ exploitation”  of  new  countries  with  little  surplus  capital, 
and  whose  business  is  mainly  that  of  producing  raw  materials 
and  food  for  export,  by  old  countries  which  have  large  surplus 
capital,  and  are  largely  engaged  in  manufacturing ;  in  other 
words,  the  investment  in  new  countries  by  the  capitalists  of 
old  countries.  Much  bad  business  is  brought  to  light  in  every 
depression ;  but  it  is  the  peculiarity  of  the  commercial  cycle, 
as  we  have  noticed,  that  there  is  a  change  from  time  to  time 
in  the  favorite  business,  so  that  every  period  has  its  special 
trade  development,  and  special  trade  disease.  The  favorite 
business  for  many  years  before  18T3  had  become  that  of 
foreign  investment,  and  now  the  depression  occurs  where 
there  was  the  greatest  expansion.  Direct  evidence  in  such 
matters  is  difficult ;  it  would  hardly  be  possible  to  measure 
precisely  the  extent  of  the  various  descriptions  of  disaster 
which  combine  to  make  a  crisis ;  but  there  are  many  facts  and 
circumstances  which  can  leave  little  doubt  in  the  mind  that 
the  direct  evidence,  if  it  could  be  obtained,  would  wholly  con¬ 
firm  the  conclusion  stated. 


THE  LIQUIDATIONS  OF  1873-1876. 


359 


The  order  of  events  in  the  crisis  affords  of  itself  a  very 
striking  confirmation  of  the  assumption.  The  difficulties  com¬ 
menced  in  the  countries  more  or  less  farmed  by  the  capital 
of  England  and  other  old  countries;  whose  industries  are 
nourished  by  public  loans  from  England,  and  by  the  invest¬ 
ment  of  private  English  capitalists  within  their  territories, 
principally  in  the  form  of  English  iron  and  manufactures. 
The  crisis  in  Austria,  which  was  the  first  in  the  whole  series, 
was  a  crisis  in  a  country  answering  this  description  to  some 
extent.  To  the  United  States,  where  the  next  crash  occurred, 
the  description  is  still  more  applicable.  The  South  American 
countries,  whose  prolonged  suffering  was  the  special  feature 
of  1874,  are  almost  a  domain  of  England ;  and  Russia,  too, 
is  largely  “  developed  ”  by  English  capital.  Some  of  these 
countries,  especially  Austria  and  Russia,  have  not  been  ex¬ 
clusively  dependent  on  English  capital.  They  have  also  bene¬ 
fited  by  the  accumulation  of  capital  in  Holland/ Belgium,  and 
France,  which  had  been  drawn  largely  to  Germany  before 
1873,  through  the  French  indemnity,  and  had  overflowed 
thence  into  Austria  and  Russia ;  but  the  indemnity  payments, 
though  they  helped  to  precipitate  and  aggravate  the  crisis  in 
Austria,  did  not  alter  the  power  of  the  crisis  to  react  on  Eng¬ 
land.  No  doubt,  in  1873,  as  already  noticed,  the  collapse  of 
the  foreign  loan  financing  had  been  foreshadowed ;  but  the 
anticipatory  events  of  that  year  were  in  themselves  compara¬ 
tively  unimportant,  so  that  down  to  1875  what  chiefly  hap¬ 
pened  was  a  succession  of  monetary  and  commercial  crises  in 
countries  dependent  on  England,  but  from  which  England  by 
comparison  escaped.  In  1875  these  crises  were  succeeded  by 
a  crisis  in  England  itself  of  very  great  intensity,  naturally 
leading  to  a  renewal  of  crisis  and  distress  elsewhere,  though 
not  of  actual  panic,  and  the  whole  culminating  in  the  finan¬ 
cial  disorders  of  the  foreign  loan  collapses,  which  will  prob¬ 
ably  form,  in  after  years,  the  most  conspicuous  feature  of  the 
whole  series  of  liquidations.  There  appears  to  have  been  a 
natural  order,  therefore,  in  the  successive  crises  to  which  the 
countries  dependent  on  England  have  been  subjected,  leading 
to  a  crisis  in  England  itself,  and  finally  to  a  financial  as  well 
as  a  commercial  collapse. 


360 


ECONOMIC  HISTORY. 


We  have  next  to  adduce  in  evidence  the  fact  of  the  great 
expansion  of  the  business  of  investment  in  foreign  countries 
previous  to  the  depression.  The  great  multiplication  of  for¬ 
eign  loans  in  the  period  is  now  familiar.  Not  to  speak  of 
Turkish  and  other  loans,  which  were  so  largely  mere  borrow¬ 
ings  to  pay  interest,  there  was  a  loan  of  <£32,000,000  for  Egypt, 
after  there  had  been  large  loans  in  1868  and  18 TO  ;  Chili 
in  the  same  time  (1867-73)  borrowed  £5,250,000 ;  Peru, 
£24,000,000;  Brazil,  £10,000,000 ;  Russia,  £77,000,000  ;  and 
Hungary,  £22,000,000,  —  exclusive  of  minor  borrowings  by 
guaranteed  companies  and  otherwise.  These  were  the  nominal 
amounts  of  the  loans,  and  the  real  money  or  money’s  worth 
ever  transmitted  to  those  countries  in  respect  of  them  must 
have  been  much  less ;  but,  making  all  deductions,  they  indi¬ 
cate  an  immense  direct  credit  opened  up  in  this  country  in 
favor  of  the  States  named.  The  minor  borrowings  we  have 
referred  to  were  equally  important,  if  not  more  important, 
and,  especially  in  the  case  of  the  United  States,  the  aggregate 
of  small  loans  for  railways  and  other  purposes  was  immense. 
All  this  direct  borrowing  likewise  implied  a  great  investment 
of  capital  privately  in  foreign  countries.  Merchants  and 
traders  were  induced  to  set  up  establishments  abroad  to  facili¬ 
tate  the  business  which  the  loans  brought  into  existence,  and 
accommodate  the  wants  of  emigrants  to  the  new  fields  of  in¬ 
dustry.  The  result  was  a  luxuriant  industrial  growth  in  the 
new  countries  by  means  of  this  vast  direct  and  indirect  credit 
which  old  countries  were  giving.  Thus  in  the  United  States, 
immediately  before  1873,  the  length  of  the  whole  railway 
system  had  been  doubled  in  seven  years ;  in  Russia  almost  the 
entire  system  of  12,000  miles  has  been  created  since  1868 ;  in 
Austria  there  had  been  an  increase  from  2,200  miles  in  1865, 
to  over  6,000  miles  in  1873 ;  and  in  South  America,  Brazil, 
the  River  Plate  republics,  Chili,  and  Peru,  had  all  been  en¬ 
dowed  with  railways  in  a  very  few  years,  —  the  loans  for 
these  countries  above  enumerated,  and  especially  the  above 
loan  of  £24,000,000  for  Peru,  being  avowedly  all  for  railways. 
And  never  was  there  a  more  rapid  development  of  the  foreign 
trade  of  the  United  Kingdom.  The  total  import  and  export 


THE  LIQUIDATIONS  OF  1873-1876. 


361 


trade,  which  was  <£500,986,000  in  1867,  had  risen  in  1873,  or 
in  six  years  only,  to  £682,292,000,  or  thirty-six  per  cent ;  and 
the  trade  per  head  from  £16  Is.  3t?.  to  £21  4s.  9 d.,  or  thirty- 
two  per  cent.  The  exports  of  British  produce  alone,  to  take 
the  two  extreme  years,  had  risen  from  £179,678,000  in  1868 
to  £256,257,000  in  1872,  or  forty-two  per  cent  in  four  years, 
the  increase  per  head  being  in  the  same  period  from  £5  17s. 
4c?.  to  £8  Is.,  or  thirty-seven  per  cent.  All  this  had  followed 
a  rapid  rise  in  previous  years ;  for  the  panic  of  1 866  was 
chiefly  the  collapse  of  a  home  company  mania,  and  had  not 
brought  with  it  discredit  of  foreign  loans,  or  a  collapse  of  the 
business  of  lending  to  foreign  countries.  And  in  one  or  two 
trades  the  increase  of  business  was  even  greater  than  the 
general  increase.  Thus  the  quantity  of  our  iron  and  steel  ex¬ 
ports  rose  from  2,042,000  tons  in  1868  to  3,383,000  tons  in 
1872,  or  sixty-six  per  cent  in  four  years,  while  there  was  sim¬ 
ultaneously  a  rise  of  price  which  made  the  increase  in  values 
immense,  not  only  in  these,  but  in  other  articles  where  there 
was  no  such  increase  of  quantity.  It  is  sometimes  said  that 
the  burst  of  trade  which  culminated  in  1872-73,  was  largely 
due  to  the  extra  demand  for  our  manufactures  created  by 
the  Franco-German  War.  This  war  checked  manufacturing 
on  the  Continent  for  nearly  a  twelvemonth,  besides  causing 
a  war  demand  for  certain  of  our  manufactures.  But  the 
comparison  we  have  made  is  of  a  year  when  the  war  was  long 
over,  with  a  year  quite  before  the  war,  while  the  most  con¬ 
spicuous  instance  of  increase  in  our  exports  was  in  iron  and 
steel,  which  was  clearly  in  connection  with  increased  railway 
construction  abroad.  The  expansion  of  our  foreign  trade  was 
thus  manifestly  in  connection  with  the  general  expansion  of 
our  foreign  investment  business,  and  not  the  result  of  the 
accidental  or  temporary  causes  which  have  been  assigned. 

That  there  has  been  a  most  disproportionate  stoppage  of 
the  foreign  investment  business,  which  would  go  far  to  ac¬ 
count  for  the  present  depression,  is  also  very  obvious.  I  do 
not  refer  so  much  to  the  notorious  stoppage  of  the  issues  of 
foreign  loans,  small  and  great;  after  every  great  crisis  new 
issues  of  almost  every  kind  come  to  a  standstill,  as  frequent 


362 


ECONOMIC  HISTORY. 


experience  lias  shown.  It  was  so  after  1866,  and  had  been  so 
after  similar  years  of  crisis,  although  I  doubt  if  foreign  issues, 
as  distinguished  from  home  enterprises,  have  ever  been  so  com¬ 
pletely  stopped  as  they  are  now.  Quite  apart  from  this,  we 
have  unmistakable  evidence  of  the  decline  in  foreign  invest¬ 
ment  business  in  the  financial  and  industrial  embarrassments 
in  new  countries,  of  which,  as  I  write,  the  grea_t  railway  strikes 
in  the  United  States  furnish  a  new  illustration.  There  has  also 
been  a  diminution  of  singular  magnitude  in  our  export  trade. 
That  trade  has  frequently  fallen  off  in  times  of  general  de¬ 
pression,  but  never  to  such  an  extent  as  has  lately  been  wit¬ 
nessed.  The  diminution  altogether  in  the  exports  of  home 
produce  and  manufactures  has  been  from  £256,257,000  in 
1872  to  £200,639,000  in  1876,  the  change  being  partly  due, 
as  usual,  and  perhaps  rather  more  than  usual,  to  a  fall  in 
price,  but  only  partially  to  that  cause.  There  has  not  since 
the  free  trade  period  been  such  a  decline  in  our  foreign  trade, 
just  as  there  had  been  no  previous  example  of  so  greal  an 
expansion.  The  decline  has  also  been  mainly  in  the  exports 
to  such  countries  as  the  United  States,  which  had  been  our 
great  borrowers,  —  the  falling  off  to  the  United  States  alone 
being  from  £40,737,000  in  1872  to  £16,834,000  in  1876,  this 
latter  figure  being  the  lowest  since  1864.  It  has  also  been 
mainly  in  such  articles  as  iron  and  steel ;  the  exports  of  which 
diminished  from  3,383,000  tons  and  £35,996,000  in  value  in 
1872,  to  2,224,000  tons  and  £20,737,000  in  value  in  1876; 
while  the  exports  to  the  United  States  alone  fell  from  975,000 
tons  in  1872  to  only  160,000  tons  in  1876.  The  recent  dimi¬ 
nution  in  our  export  trade  is  therefore  not  only  unusual,  but 
it  is  a  diminution  of  the  exports  to  new  countries,  and  a 
diminution  of  those  articles  which  we  send  abroad  for  the 
purpose  of  new  works  in  such  countries.  So  great  a  change 
in  one  great  branch  of  our  business  would  go  far  to  account 
for  the  general  depression  now  prevailing,  which  is  thus  once 
more  traced  to  the  failure  of  our  foreign  investments. 

The  embarrassments  in  the  new  countries  were  also  con¬ 
nected  with  the  excessive  development  of  their  capabilities 
which  had  been  attempted.  A  very  considerable  amount  of 


THE  LIQUIDATIONS  OF  1873-1876 . 


863 


the  railway  and  other  speculation  during  the  last  few  years 
has  been  proved  to  have,  been  wholly  in  anticipation  of  the 
wants  of  the  world,  the  evidence  of  this  being  an  overpro¬ 
duction  of  raw  materials  and  food,  the  characteristic  pro¬ 
ducts  of  the  new  countries.  Of  this  over-production  the  most 
significant  sign  was  the  low  price  of  wheat  in  1875,  notwith¬ 
standing  the  bad  harvest  of  that  year  in  several  countries. 
There  had  previously  been  complaint  of  low  prices  in  the 
United  States,  —  in  1873,  for  instance,  —  and  of  inability 
to  “  keep  back  ”  crops.  Similar  complaints  had  also  been 
received  from  Russia  in  ‘1874.  Even  in  1876  the  price  of 
wheat  was  slow  in  rising  in  the  autumn,  notwithstanding  a 
generally  bad  harvest,  and  the  extreme  war  rise  the  follow¬ 
ing  spring  was  only  maintained  a  few  days.  In  other  words, 
the  assumption  as  regards  wheat  that  new  countries  might  be 
settled  indefinitely  has  proved  to  be  erroneous.  The  result  of 
what  appears  to  be  excessive  cultivation  is  an  un remunerative 
price,  which  leaves  merely  agricultural  communities  in  dis¬ 
tress,  and  disturbs  their  whole  system  of  industry.  It  has 
been  the  same  with  other  raw  materials,  such  as  cotton, 
although  perhaps  not  to  the  same  extent.  But  in  general 
the  business  of  producing  raw  materials  and  food  had  been 
overdone,  and  the  crises  in  Austria  and  the  United  States  in 
1873,  followed  as  they  have  since  been  by  the  similar  crises 
in  South  America  and  Russia,  were  evidence  that  the  power 
to  support  the  financing  of  the  previous  two  or  three  years, 
which  was  based  on  the  business  of  investment  in  new  coun¬ 
tries,  had  ceased. 

The  uglier  features  of  the  collapse  of  foreign  loans  also 
furnish  evidence  of  the  characteristic  mark  of  the  crisis  with 
which  we  have  been  dealing.  In  addition  to  the  issue  of  loans, 
which  involved  the  investment  of  capital  in  a  fixed  form  to  an 
extravagant  extent,  so  that  immediate  loss  and  ruin  could  not 
but  ensue,  there  had  taken  place  in  a  few  years  before  1872 
frequent  issues  of  loans  in  foreign  countries  so-called,  which 
were  only  disguises  to  plunder  the  public.  We  refer  to  the 
loans  for  Honduras,  Paraguay,  San  Domingo,  and  Costa  Rica, 
which  were  investigated  by  the  Foreign  Loans  Committee, 


364 


ECONOMIC  HISTORY. 


and  to  a  numerous  class  of  which  these  were  perhaps  the 
most  flagrant  specimens.  These  were  simply  issues  by  knots 
of  speculators,  usually  on  the  plea  that  they  were  for  some 
public  work,  —  to  which  a  small  portion  of  the  money  raised 
was  perhaps,  in  fact,  devoted,  —  but  really  with  the  design,  as 
carried  out  by  those  concerned,  to  pay  themselves  large  sums 
in  commissions  and  otherwise,  so  long  as  the  public  could  be 
got  to  believe  in  such  things  by  the  payment  of  interest  out 
of  the  funds  they  had  themselves  advanced.  All  this  was 
very  natural.  The  peculiarity  of  the  time  being  the  develop¬ 
ment  of  foreign  countries  by  loans,  it  was  only  natural  that 
the  illegitimate  financing  of  the  time  should  also  consist  of  so- 
called  loans.  As  there  had  been  bogus  companies  in  the  days 
of  the  company  mania,  so  now  there  were  bogus  loans. 

These  are  all  circumstances  tending  to  show  how  much  the 
bad  business  brought  to  light  in  the  recent  depression  was 
connected  with  the  business  of  investment  in  new  countries, 
and  its  accessories,  which  had  previously  just  received  so 
great  an  expansion.  As  we  have  already  remarked,  there 
was  much  bad  business  besides.  In  the  set  of  failures  con¬ 
nected  with  that  of  Messrs.  Collie,  what  seemed  to  be  shown 
especially  was  a  peculiar  disorder  in  the  trade  with  India, — 
the  result,  it  is  probable,  of  the  undue  investment  of  capital 
in  that  trade  at  a  date  as  far  back  as  the  cotton  mania  in 
1863  and  1864.  But  the  bad  business  of  foreign  investment 
and  financing  has  certainly  been  far  the  most  prominent. 

III. 

A  third  distinguishing  mark  of  the  crisis  appears  to  be  the 
singular  lightness  of  its  effects  on  English  industry  and 
wages.  As  has  been  hinted  already,  such  is  not  the  com¬ 
mon  impression  regarding  it.  On  the  contrary,  the  depres¬ 
sion  of  trade  is  spoken  of  in  common  speech  as  something 
entirely  unprecedented  both  in  intensity  and  duration.  But 
a  careful  examination  must  prove  that,  as  far  as  matters 
have  yet  gone,  the  common  impression  is  wrong,  and  the 
facts  are  entirely  the  other  way. 


THE  LIQUIDATIONS  OF  1873-1876. 


365 


The  common  impression  appears  to  be  due  to  a  misinter¬ 
pretation  of  two  undoubted  facts ;  first,  the  evident  magnir 
tude  of  the  financial  collapse  in  foreign  loans,  which  has 
been  productive  of  great  social  distress  among  the  classes 
who  have  most  ample  opportunities  of  proclaiming  their 
grievances;  and  next,  the  magnitude  of  the  decline  of  the 
foreign  trade  of  the  country,  which  is  identified  with  a  de¬ 
cline  in  its  whole  trade.  But  it  is  easv  to  see  that  there  is 

4/ 

a  misinterpretation.  The  magnitude  of  the  financial  collapse 
is,  of  course,  very  serious.  The  novelty  of  the  deception  of 
the  public  by  bogus  loans  has  increased  the  evil  as  compared 
with  the  evil  of  a  company  mania,  while  the  opportunities  of 
fraud  were  really  more  favorable  to  the  conspirators  than  in 
the  manufacture  of  bubble  companies.  A  State  loan  sounds 
more  respectable  than  a  company  issue.  On  the  whole,  the 
securities  of  States  for  a  long  period  had  also  answered 
better  than  the  shares  of  companies,  and  although  also  in 
former  years  many  State  loans  had  proved  the  source  of  loss 
to  English  investors,  —  several  South  American  States, 
Greece,  Spain,  and  one  or  two  States  of  the  American  Union 
having  all  proved  defaulters,  —  yet  there  had  been  no  flagrant 
instances  of  loans  which  were  merely  cloaks  to  let  promoters 
and  financiers  have  commissions.  The  agents  and  institu¬ 
tions  connected  with  States  also  controlled  larger  resources 
than  had  been  controlled  by  the  financiers  of  companies. 
The  inability  of  investors,  therefore,  to  form  a  good  judg¬ 
ment  on  the  investments  submitted  to  them,  their  disposition 
to  rely  on  market  price,  and  other  extraneous  or  irrelevant 
circumstances,  was  never  experimented  on  so  widely,  or 
with  more  unfortunate  results.  Hence  the  magnitude  of  the 
bad  business  and  the  ensuing  collapse.  In  the  loans  for 
Turkey,  Egypt,  and  Peru  alone,  the  depreciation  of  securities 
within  a  year  after  the  Turkish  collapse  amounted  to  about 
<£150,000,000,  while  there  is  a  total  destruction  or  suspen¬ 
sion  of  income  from  tainted  securities  exceeding  £20,000,000 
a  year.  But  great  as  this  collapse  is,  it  has  probably  affected . 
very  little  the  accumulation  or  real  wealth  of  the  country. 
Many  people  feel  themselves  poorer  than  they  were  before,  but 


366 


ECONOMIC  HISTORY. 


the  community  as  a  whole  is  not  really  poorer  by  the  pricking 
of  all  these  bladders.  A  certain  number  of  people  are  simply 
prevented  from  continuing  any  longer  the  process  of  living 
on  their  capital,  for  that  is  what  they  were  doing  when  they 
were  spending  the  so-called  interest  paid  them,  which  was 
really  only  a  return  of  what  they  had  themselves  advanced. 
But  the  whole  of  the  so-called  interest  was  not  so  spent,  a 
great  deal  of  it,  as  is  the  case  with  the  interest  of  every  de¬ 
scription  of  investment,  being  reinvested,  and  in  this  way 
the  collapse  really  changes  nothing,  except  to  let  many  peo¬ 
ple  know  that  their  accumulations  were  imaginary.  The 
direct  economic  effect  is  consequently  nil,  although  the  so¬ 
cial  effects  and  individual  disasters  are  of  the  most  serious 
kind.  The  depression  of  trade  attending  a  financial  col¬ 
lapse  ought  not,  therefore,  to  be  measured  by  the  seeming 
magnitude  of  the  financial  collapse  itself,  which  last  may  be 
very  great  without  the  ordinary  industry  of  a  country  being 
seriously  checked. 

As  regards  the  second  fact  which  is  misinterpreted,  — 
namely,  the  decline  of  the  foreign  trade,  — the  common  im¬ 
pression  only  requires  to  be  challenged  to  prove  its  unsound¬ 
ness.  We  have  probably  a  larger  proportion  of  foreign  trade 
than  any  other  great  nation.  Our  workmen  and  capitalists 
have  gradually  come  to  exchange  a  larger  proportion  of  the 
products  of  their  industry  for  foreign  products  than  any  other 
people.  But  even  yet  we  are  very  far  from  exchanging  more 
than  a  small  part  of  what  we  produce.  Our  whole  agriculture 
is  for  home  consumption;  our  coal  and  iron  mining,  our  cot¬ 
ton  and  wool  spinning  and  weaving,  our  manufactures  gener¬ 
ally  are  also  mainly  for  home  consumers.  A  decline  in  our 
foreign  trade,  therefore,  is  only  a  decline  in  a  branch  of  our 
whole  trade,  and  should  by  no  means  be  identified  with  a  gen¬ 
eral  depression  in  business.  The  recent  decline  in  the  foreign 
trade,  moreover,  is  almost  entirely  a  decline  in  “optional” 
business.  It  is  a  decline  in  our  exports  of  such  articles  as 
we  have  been  in  the  habit  of  exporting  as  a  means  of  invest¬ 
ing  our  capital  abroad.  When  we  stop  such  exports,  certain 
branches  of  home  industry,  which  have  been  fitted  to  this 


THE  LIQUIDATIONS  OF  1873-1876.  36  7 

peculiar  trade  suffer ;  but  the  capital  which  would  otherwise 
have  been  sent  abroad,  and  the  means  of  producing  that 
capital,  are  not  destroyed.  In  the  course  of  time  if  the  taste 
for  foreign  investment  does  not  revive,  the  capital  and  labor 
employed  in  making  articles  for  export  will  be  turned  to  the 
production  of  articles  for  consumption  and  investment  at 
home.  Instead  of  merely  looking  at  the  foreign  trade,  then, 
we  should  look  at  our  aggregate  trade  in  such  times  of  de¬ 
pression,  and  not  suffer  our  opinions  to  be  distorted  by  one 
or  two  conspicuous  facts. 

Coming  to  the  subject  in  this  way,  we  do  not  see  how  it 
can  be  doubted  that  the  recent  depression,  although  it  is 
very  protracted,  is  as  yet  singularly  light  in  degree.  Our 
imports  of  the  chief  articles  of  popular  consumption,  to  begin 
with,  have  not  diminished  but  increased.  Indeed,  one  of  the 
favorite  complaints  about  the  depression  of  trade  is  the  old 
cry  of  the  excess  of  imports  over  exports,  which  is  certainly 
greater  than  usual  because  our  investments  in  new  countries 
have  ceased  for  a  time,  but  which  is  the  permanent  charac¬ 
teristic  of  English  trade.  It  is  quite  certain,  however,  that 
no  country  sends  us  any  goods  on  credit ;  it  is  England  which 
always  gives  credit  in  the  trade  of  the  world.  Whatever 
increase  of  imports  there  may  be,  then,  is  a  sign  of  real  abil¬ 
ity  to  pay  for  them,  and  pro  tanto  of  the  undiminished  pros¬ 
per^  of  the  country.  To  the  same  effect  we  have  the  fact 
of  an  increase  of  railway  traffic  year  after  year  during  the 
depression.  The  increase  in  1874  and  1876,  and  again  in 
1877  has  been  small;  but  in  1875,  the  very  year  of  the  great 
commercial  and  financial  collapse,  it  was  considerable.  Evi¬ 
dence  in  the  same  sense  is  also  supplied  by  the  non-increase 
of  pauperism  all  through  the  depression,  and  by  the  steady 
augmentation  of  the  national  revenue  until  the  present  year, 
and  by  the  increase  of  the  savings-bank  deposits.  The  non¬ 
increase  of  pauperism  is  no  doubt  partly  due  to  our  improved 
administration,  but  no  improvement  of  administration  could 
have  prevented  such  an  increase  of  paupers  and  decline  of 
revenue  as  followed  the  panics  of  1847,  1857,  and  1866,  not 
to  speak  of  the  awful  convulsions  and  distress  which  marked 


368 


ECONOMIC  HISTORY . 


the  depression  of  trade  in  still  earlier  periods.  To  any  one 
who  has  even  glanced  at  the  economic  history  of  England 
during  the  present  century,  the  common  talk  now  about  the 
“  unusual  ”  depression  of  our  trade  appears  simply  ludicrous. 
The  people  who  indulge  in  it  have  simply  never  thought  of 
what  depression  of  trade  is.  There  has  probably  never  been 
a  great  commercial  crisis  hi  England  which  caused  so  little 
suffering  to  the  mass  of  the  nation. 

When  we  think  of  the  matter  a  little  it  seems  reasonable 
enough  also  that  the  depression  should  be  a  mild  one. 
Severe  as  the  crisis  has  been,  we  were  lucky  enough  to  es¬ 
cape  an  actual  panic,  with  the  shock  to  credit  and  other 
lamentable  incidents  which  a  panic  invariably  produces.  It 
is  probable  also  that  we  were  really  befriended  by  the  pecu¬ 
liar  events  in  the  money  market  in  connection  with  the 
German  coinage.  The  withdrawals  of  gold  for  Germany 
had  the  effect  of  anticipating  the  stringency  in  the  money 
market  which  a  period  of  great  expansion  ends  in.  The  ex¬ 
pansion  was  thus  hindered  from  reaching  the  extreme  it 
would  otherwise  have  reached,  and  the  reaction  is  less 
severe.  Some  good  judges  are  of  opinion  that  we  have  to 
thank  yet  another  cause,  — the  high  normal  wages  of  our 
workmen  and  their  independence  of  abundant  harvests  and 
cheap  wheat,  as  compared  with  what  was  formerly  the  case, 
so  that  all  our  staple  industries  are  steadier  than  they  were. 
But  I  should  doubt  the  effect  of  this  cause  without  greater 
experience  than  we  have  yet  had.  Workmen  will  suffer,  it 
is  to  be  feared,  in  a  way  in  which  they  have  not  lately  suf¬ 
fered,  if  another  time  of  expansion  such  as  there  was  in  1872 
should  reach  its  full  term  and  industry  be  subjected  to  the 
strain  of  the  inevitable  reaction.  But  without  this  cause,  the 
actual  facts  of  the  absence  of  a  panic  during  all  this  depres¬ 
sion,  and  of  the  successive  stringencies  in  the  money  market 
which  checked  the  exuberant  growth  of  1872  and  1873,  ap¬ 
pear  quite  sufficient  to  account  for  the  comparative  mildness 
of  the  effects  of  the  depression  we  are  witnessing. 


THE  LIQUIDATIONS  OF  1873-1876. 


369 


IV. 

The  marks  of  the  present  depression  which  we  have  enu¬ 
merated  are  thus  its  universality,  its  origin  in  the  breaking 
down  of  the  bad  business  of  foreign  investment,  and  its 
mildness  in  the  United  Kingdom  as  compared  with  former 
periods  of  depression.  Is  there  anything  in  these  peculiari¬ 
ties,  or  in  any  other  circumstances  of  the  depression,  to  lead 
us  to  anticipate  that  it  will  be  unusually  protracted  or  that  its 
effects  will  be  permanent  ?  Is  the  depression,  in  other  words, 
the  beginning  of  anything  unusual  or  unprecedented  ? 

To  put  the  questions  thus  explicitly  is  perhaps  to  answer 
them.  Although  there  is  much  vague  talk  about  existing 
depression, —  which  is  really  based  on  an  assumption  that  it 
is  something  unheard  of  and  must  be  lasting,  —  it  is  not  so 
easy  to  assert  explicitly  what  is  so  confidently  assumed.  To 
suppose  the  permanence  of  almost  any  depression  would,  in 
fact,  be  to  suppose  a  change  in  human  nature  itself.  Uni¬ 
versal  dulness  and  poverty  are,  in  fact,  contradictions  in 
terms,  unless  it  is  supposed  that  all  people  will  voluntarily 
be  idle  when  they  have  the  strongest  motives  to  work. 
Whatever  awkwardness  there  may  be  in  the  distribution  of 
labor  and  capital  at  certain  times,  the  power  to  produce  and 
the  wish  to  consume  ensure  that  with  the  means  of  production 
unimpaired, —  and  there  is  no  allegation  that  the  means  of 
production  in  the  present  case  are  impaired,  —  production 
will  go  on  and  increase  with  the  increase  of  population  and 
with  every  species  of  chemical  and  mechanical  improvement. 
It  is  thus  morally  certain  that  if  at  any  time  the  industrial 
machine,  as  a  whole,  is  partially  disused  and  times  are  dull, 
a  period  of  full  employment  and  prosperity  will  return. 

And  short  of  the  depression  being  permanent,  its  effects 
will  not,  we  think,  be  worse  than  usual,  if  indeed  the  worst 
is  not  already  past.  The  disorder  has  been  very  general 
throughout  the  world,  because  industrially  the  world  is  get¬ 
ting  to  be  more  and  more  one  country ;  but  there  is  mani¬ 
festly  nothing  in  the  extent  of  a  depression  to  alter  its 
character  or  the  power  of  the  communities  affected  to  re- 

24 


370 


.ECONOMIC  HISTORY. 


cover.  So  far  as  England  is  concerned,  moreover,  all  that 
lias  happened  is  that  a  particular  part  of  our  trade,  — our 
exports  of  domestic  produce  and  manufactures,  — is  mo¬ 
mentarily  weak,  just  as  in  former  times  the  home  trade 
dependent  on  railway  contractors  or  bubble  companies  was 
weak.  Our  new  investments  in  a  particular  direction  have 
failed,  but  that  is  all.  There  is  clearly  no  reason  in  this  for 
any  prolonged  stoppage  or  diminished  use  of  the  industrial 
machine  for  all  the  miscellaneous  purposes  of  life,  although 
it  will  only  be  by  degrees  that  new  outlets  for  our  surplus 
capital  can  be  found.  All  the  reasons  assigned  to  account 
for  the  lightness  of  the  depression  until  now,  — the  absence 
of  panic,  the  fact  that  the  collapse  is  so  much  a  merely  finan¬ 
cial  one,  and  the  circumstance  that  the  expansion  previous 
to  the  depression  was  arrested  in  its  natural  development, — 
are  also  reasons  why  it  should  not  be  more  protracted  than 
usual.  Some  new  mischief  may  of  course  arise,  but  there  is 
nothing  on  the  face  of  the  facts,  according  to  all  former  ex¬ 
perience,  to  lead  us  to  expect  an  aggravation  of  the  present 
evils. 

Nor  do  the  special  causes  sometimes  assigned  for  expect¬ 
ing  an  unusual  degree  and  continuance  of  depression  appear 
to  be  entitled  to  much  weight.  The  British  workman,  it  is 
said,  drives  business  away  by  his  misconduct  and  his  de¬ 
mands  for  excessive  wages.  Foreign  nations  are  increasing 
their  manufactures  of  the  very  articles  of  which  England  till 
lately  had  a  monopoly.  Every  import  of  a  foreign  manu¬ 
facture  into  England,  at  a  time  like  this,  gives  occasion 
for  a  new  exclamation  that  English  industry  is  threatened. 
The  changes  are  constantly  rung  upon  such  facts  as  the  in¬ 
creased  capacity  of  the  United  States  for  the  production  and 
manufacture  of  iron ;  the  importation  of  certain  descriptions 
of  American  cotton  manufactures  into  England ;  the  appear¬ 
ance  of  Belgian  and  German  manufactures  in  our  markets  at 
a  cheaper  price  than  the  articles  can  be  made  by  ourselves. 
But  those  who  use  this  language  appear  to  fail  altogether  in 
measuring  the  extent  of  the  mischief  they  point  out.  A 
great  deal  of  the  apparent  competition  of  foreign  manufac- 


THE  LIQUIDATIONS  OF  1873-1876. 


371 


tures  is  due  to  the  search  for  a  market  which  occurs  in  every 
time  of  depression,  and  which  furnishes  no  sure  indication 
whatever  of  any  real  change  in  the  currents  of  trade.  All 
we  know  for  certain  is  that  on  the  other  side  the  complaints 
abroad  of  the  competition  of  English  manufactures  are  loud¬ 
est  at  such  a  time,  and  that  facts  as  to  foreign  competition, 
similar  to  those  now  alleged,  have  been  brought  forward  in 
every  time  of  depression  for  the  last  half-century,  without 
any  serious  permanent  result  on  English  trade  being  trace¬ 
able.  That  trade,  on  the  contrary,  as,  for  example,  after 
the  year  1869,  when  a  great  noise  was  made  about  similar 
facts,  always  makes  a  more  rapid  advance  than  ever  after  each 
depression.  No  one  can  dispute,  indeed,  that  English  work¬ 
men  are  often  foolish  for  their  own  interest,  or  that  some 
English  trades  have  diminished,  and  others  may  yet  dimin¬ 
ish  or  may  become  stationary,  while  foreign  trades  of  the 
same  kind  increase.  Still  the  question  here  is  of  the  general 
prosperity,  and  it  is  easy  to  recognize  the  strength  of  the 
influences  which  are  likely,  and,  we  believe,  are  certain  to 
limit  the  evils  feared,  as,  in  fact,  they  always  have  limited 
them.  Our  workmen  do,  in  fact,  succeed  in  getting  higher 
wages,  as  a  rule,  than  foreign  workmen ;  they  do  not  migrate, 
and  pauperism  does  not,  on  an  average  of  years,  increase,  — 
all  signs  that  manufacturing,  as  a  whole,  whatever  may  hap¬ 
pen  to  particular  trades,  increases  in  England.  It  is  because 
there  is  so  much  more  profitable  manufacturing  here  than 
elsewhere  that  our  workmen  can  enforce  the  higher  wages. 
As  we  certainly  cannot  expect  that  foreign  countries  should 
manufacture  nothing  at  all,  but  must  rather  desire  their 
manufacturing  to  increase,  there  is  really  nothing  in  all  that 
is  said  of  foreign  competition  to  concern  us  in  an  inquiry  as 
to  the  permanence  of  the  present  depression. 

The  fallacy  in  the  use  of  these  alleged  facts  as  to  foreign 
competition  consists,  indeed,  very  largely  in  the  forgetful¬ 
ness  of  other  facts  which  are  equally  material :  that  our  for¬ 
eign  trade  itself  is  not  everything  to  us,  but  is,  after  all, 
only  a  fraction  of  our  whole  business ;  that  long  before  com¬ 
petition  can  diminish  that  trade  materially  it  must  produce 


372 


ECONOMIC  HISTORY. 


a  fall  of  wages,  while  wages  abroad  will  rise  if  foreign  trade 
increases ;  and  that  although  foreign  countries  increase  their 
manufactures,  we  are  not  necessarily  ruined,  —  probably  we 
are  greatly  gainers.  To  take  what  seems  as  formidable  a 
case  of  possible  competition  with  us  as  any  that  is  threat¬ 
ened,  namely,  v  the  increase  of  the  American  iron  and  coal 
industries  under  natural  conditions.  It  seems  probable 
enough  that  in  course  of  time  these  industries  will  be  very 
largely  developed  in  the  United  States.  The  people  have 
natural  aptitude  and  skill,  and  other  advantages,  and  they 
may  produce  iron  manufactures  cheaper  than  they  can  buy 
them  abroad.  In  time  they  may  export  them  to  other  coun¬ 
tries.  But  how  is  England  necessarily  the  poorer  for  that, 
and  how  much  ?  We  may  come  to  export  a  smaller  quantity 
of  our  iron  manufactures  to  the  United  States  than  in  the 
years  before  1872;  but  at  most  we  shall  only  lose  the  profit 
on  so  much  trade,  not  the  whole  value  of  what  we  sold  to  the 
United  States,  which  was,  in  comparison  with  our  whole 
trade,  by  no  means  a  large  sum.  Nor  shall  we  even  lose  the 
whole  profit.  We  can  only  lose  the  difference  of  profit  be¬ 
tween  what  was  derived  from  that  trade  and  the  return  on 
the  less  profitable  trade,  into  which  a  portion  of  our  capital 
and  labor  are  diverted.  Possibly,  also,  the  growth  of  the 
world  may  be  such  that  the  expansion  of  American  industry 
will  not  be  exclusive  of,  but  will  be  coincident  with  a  simi¬ 
lar  expansion  of  our  own,  — there  may  be  room  for  both  of 
us.  In  that  case,  there  would  be  no  reduction  of  the  profits 
on  our  own  trade  at  all,  although  America  had  become  an 
exporter  of  iron  manufactures.  Ex  hypothesi  the  increase  of 
the  American  iron  trade  would  also  mean  that  America  be¬ 
comes  richer,  and  consequently  a  better  customer  to  the 
world  generally  for  other  things,  — thus  causing  an  increase 
of  the  general  prosperity  in  which,  with  our  extended  and 
various  trade,  we  could  not  but  participate.  Worse  things 
may  thus  happen  to  us  than  a  natural  extension  of  the  Amer¬ 
ican  iron  trade ;  and  if  it  is  extended  by  protection  only,  it 
can  of  course  do  us  still  less  harm.  There  is  something 
essentially  unsound,  therefore,  in  the  continual  references  to 


THE  LIQUIDATIONS  OF  1873-1876. 


373 


the  increase  of  manufacturing  abroad.  Our  concern  should 
rather  be  to  have  that  manufacturing  increase.  To  antici¬ 
pate  that  the  world  outside  England  is  to  be  merely  agricul¬ 
tural  or  mining,  is  to  anticipate  the  maintenance  throughout 
the  world  of  the  least  productive  forms  of  applying  human 
industry,  and  of  low  purchasing  power  among  other  coun¬ 
tries.  What  mankind  require  for  the  greater  efficiency  of 
their  labor  is  that  the  proportion  of  people  employed  in 
agriculture  and  mining  should  diminish,  and  more  and  more 
attention  should  be  given  to  other  forms  of  industry.  How 
England  should  grow  poorer  as  this  transformation  is  being 
effected,  it  is  difficult  to  imagine.  It  appears  to  be  as  clear 
as  any  proposition,  that  the  general  increase  of  production, 
leading  to  still  greater  varieties  and  subdivisions  of  manu¬ 
facturing  than  those  which  now  obtain,  must  benefit  most  of 
all  the  countries  like  England,  which  have  got  the  start  of 
others,  and  possess  all  the  best  manufacturing  appliances. 

We  should  fully  expect,  then,  when  the  liquidations  which 
have  been  in  progress  are  over,  to  see  once  more  a  great 
revival  of  prosperity.  Still  more,  according  to  all  former 
experience,  the  prosperity  to  come  must  be  even  greater  than 
anything  yet  seen.  Ever  since  1844  there  has  been  an 
ascending  scale  in  the  rate  of  our  industrial  advance.  The 
years  after  1848-49  were  more  prosperous  than  any  before, 
but  the  prosperity  of  1863-65  exceeded  that  of  1850-53,  just 
as  the  prosperity  of  1870-73  exceeded  that  of  1863-65.  In 
like  manner  the  next  period  of  prosperity  will  probably  ex¬ 
hibit  a  fuller  development  than  1870-73,  and  for  a  similar 
reason,  namely,  that  the  productive  capacity  of  civilized 
nations,  in  proportion  to  their  numbers,  is  annually  increas¬ 
ing, —  being  capable  of  almost  indefinite  increase.  More 
railways  and  more  machinery,  the  improved  knowledge  of 
chemical  and  other  arts,  imply  that,  one  year  with  another, 
in  proportion  to  their  population,  civilized  communities  can 
produce  more  real  wealth  than  they  did  before.  Depression 
comes  at  times  because  mistakes  have  been  made,  and  the 
wrong  things  are  produced ;  but  when  the  mistakes  are  cor¬ 
rected,  or  some  new  favorable  influence  operates,  such  as  a 


374 


ECONOMIC  HISTORY. 


good  harvest,  the  tide  flows  again,  industrial  communities 
work  up  to  their  full  power,  and  they  are  all  richer  than  be¬ 
fore.  Possibly  the  workmen  at  a  given  place  may  take  out 
their  share  of  the  increased  production  in  the  privilege  of 
working  fewer  hours;  but  the  prosperity  is  there,  however 
it  may  be  enjoyed.  The  great  extension  of  railways  through¬ 
out  the  world  in  anticipation  of  real  wants,  which  was  the 
mistake  of  the  period  of  inflation,  should,  now  that  the  mis¬ 
take  has  been  paid  for,  contribute  to  a  more  rapid  advance  of 
general  prosperity  than  would  take  place  if  the  world  had 
fewer  railways.  .  .  .  [1877. 2] 

1  It  is  obvious  that  if  I  were  now  writing  I  should  have  to  speak  of  the  liqui¬ 
dations,  not  of  those  years  only  [1873-76],  but  of  1873-79,  and  have  to  explain 
more  points  than  I  could  possibly  take  up  when  writing  in  1877.  But  I  see  no 
reason  to  doubt  the  general  soundness  of  the  view  I  have  expressed  on  the  course 
of  the  present  depression  and  its  origin  ;  although,  subsequent  to  the  date  of  my 
writing,  bad  harvests  and  other  accidents  have  aggravated  that  depression 
[1879].— R.  G. 


INCREASE  OF  POPULATION. 


8<  5 


XV. 

THE  UNITED  STATES  IN  1880. 

•  v  . 

THE  INCREASE  OF  POPULATION  FROM  1790  TO  1880. 

From  Walker  and  Gannett’s  Report  on  the  Progress  of  the 
Nation.  Tenth  Census,  Yol.  I.,  pp.  xii-xx. 

/ 

1790. 

THE  first  Census  of  the  United  States,  taken  as  of  the 
first  Monday  in  August,  1T90,  under  the  provisions  of 
the  second  section  of  the  first  article  of  the  Constitution 
showed  the  population  of  the  thirteen  States  then  existing 
and  of  the  unorganized  territory  to  be,  in  the  aggregate, 
8, 929, 214. 

This  population  was  distributed  almost  entirely  on  the 
Atlantic  seaboard  extending  from  the  eastern  boundary  of 
Maine  nearly  to  Florida,  and  in  the  region  known  as  the 
Atlantic  plain.  Only  a  very  small  proportion  of  the  inhabi¬ 
tants  of  the  United  States,  not,  indeed,  more  than  five  per 
cent,  was  then  to  be  found  west  of  the  system  of  the  Appala¬ 
chian  mountains.  The  average  depth  of  settlement,  in  a 
direction  at  right  angles  to  the  coast,  was  255  miles.  The 
densest  settlement  was  found  in  eastern  Massachusetts, 
Rhode  Island,  and  Connecticut,  and  about  New  York  City, 
whence  population  had  extended  northward  up  the  Hudson, 
and  was  already  quite  dense  as  far  as  Albany.  The  settle¬ 
ments  in  Pennsylvania,  which  had  started  from  Philadelphia, 
on  the  Delaware,  had  extended  northeastward  and  formed  a 
solid  body  of  occupation  from  New  York  through  Phila¬ 
delphia  down  to  the  upper  part  of  Delaware. 

The  Atlantic  coast,  as  far  back  as  the  limits  of  tide¬ 
water,  was  well  settled  at  that  time  from  Casco  Bay  south- 


876 


ECONOMIC  HISTORY. 


ward  to  the  northern  border  of  North  Carolina.  In  what 
was  then  the  District  of  Maine,  sparse  settlements  extended 
along  the  whole  seaboard.  The  southern  two  thirds  of  New 
Hampshire  and  nearly  all  of  Vermont  were  covered  by  popu¬ 
lation.  In  New  York,  branching  off  from  the  Hudson  at  the 
mouth  of  the  Mohawk,  the  line  of  population  followed  up  a 
broad  gap  between  the  Adirondacks  and  the  Catskills,  and 
even  reached  beyond  the  centre  of  the  State,  occupying  the 
whole  of  the  Mohawk  valley  and  the  country  about  the  inte¬ 
rior  New  York  lakes.  In  Pennsylvania  population  had 
spread  northwestward,  occupying  not  only  the  Atlantic  plain, 
but  with  sparse  settlements  the  region  traversed  by  the 
numerous  parallel  ridges  of  the  eastern  portion  of  the  Appa¬ 
lachians.  The  general  limit  of  settlement  was  at  that  time 
the  southeastern  edge  of  the  Allegheny  plateau,  but  beyond 
this,  at  the  junction  of  the  Allegheny  and  Monongahela 
rivers,  a  point  early  occupied  for  military  purposes,  consid¬ 
erable  settlements  had  been  established  prior  to  the  War  of 
the  Revolution.  In  Virginia  settlements  had  extended  west¬ 
ward  beyond  the  Blue  Ridge,  and  into  what  is  now  West 
Virginia,  on  the  western  slope  of  the  Allegheny  mountains, 
though  very  sparsely.  From  Virginia  also  a  narrow  tongue 
of  settlement  had  penetrated  down  to  the  head  of  the  Ten¬ 
nessee  River,  in  the  great  Appalachian  valley.  In  North 
Carolina  the  settlements  were  abruptly  limited  by  the  base  of 
the  Appalachians.  The  State  was  occupied  with  remarkable 
uniformity,  except  in  its  southern  and  central  portion,  where 
population  was  comparatively  sparse.  In  South  Carolina,  on 
the  other  hand,  there  was  evidence  of  much  natural  selection 
apparently  with  reference  to  the  character  of  soils.  Charles¬ 
ton  was  then  a  city  of  considerable  magnitude,  and  about  it 
was  grouped  a  comparatively  dense  population ;  but  all  along 
a  belt  running  southwestward  across  the  State  near  its  cen¬ 
tral  part  the  settlement  was  very  sparse.  This  area  of  sparse 
settlement  joined  with  that  of  central  North  Carolina,  and 
ran  eastward  to  the  coast  near  the  junction  of  the  two  States. 
Further  westward  in  the  “up  country  ”  of  South  Carolina, 
the  density  of  settlement  was  noticeably  due  to  the  improve- 


INCREASE  OF  POPULATION. 


377 


ment  in  soil.  At  this  date  settlements  were  almost  entirely 
agricultural,  and  the  causes  for  variation  in  their  density 
were  general  ones.  The  movements  of  population  at  this 
epoch  may  be  traced  in  almost  every  case  to  the  character  of 
the  soil,  and  to  facility  of  transportation  to  the  seaboard; 
and  as  the  inhabitants  were  then  dependent  mainly  upon 
water  transportation,  we  find  the  settlements  also  conform¬ 
ing  themselves  very  largely  to  the  navigable  streams. 

Outside  the  area  of  continuous  settlement,  which  we  have 
attempted  to  sketch,  were  found  in  1790  a  number  of  smaller 
settlements  of  greater  or  less  extent.  The  principal  of  these 
lay  in  northern  Kentucky,  bordering  upon  the  Ohio  River, 
comprising  an  area  of  10,900  square  miles.  Another  in 
western  Virginia  lay  upon  the  Ohio  and  Kanawha  rivers, 
and  comprised  750  square  miles.  A  third  in  Tennessee, 
upon  the  Cumberland  River,  embraced  1,200  square  miles. 

In  addition  to  these,  there  were  a  score  or  more  of  small 
posts,  or  incipient  settlements,  scattered  over  what  was  then 
an  almost  untrodden  wilderness,  such  as  Detroit,  Vincennes, 
Kaskaskia,  Prairie  du  Chien,  Mackinac,  and  Green  Bay, 
besides  the  humble  beginnings  of  Elmira  and  Binghamton, 
in  New  York,  which,  even  at  that  time  lay  outside  the  body 
of  continuous  settlement. 

Following  the  line  which  limits  this  great  body  of  settle¬ 
ment  in  all  its  undulations,  we  find  its  length  to  be  3,200 
miles.  In  this  measurement  no  account  has  been  made  of 
slight  irregularities,  such  as  those  in  the  ordinary  meander- 
ings  of  a  river  which  forms  the  boundary  line  of  population ; 
but  we  have  traced  all  the  ins  and  outs  of  this  frontier  line, 
which  seem  to  indicate  a  distinct  change  in  the  settlement  of 
the  country  for  any  cause,  whether  of  progression  or  of  retro¬ 
gression.  The  area  of  settlement,  thus,  is  the  area  embraced 
between  the  frontier  line  and  the  coast,  diminished  by  such 
unsettled  areas  as  may  lie  within  it,  and  increased  by  such 
as  lie  without  it.  These  are  not  susceptible  of  very  accurate 
determination,  owing  to  the  fact  that  our  best  maps  are,  to  a 
certain  extent,  incorrect  in  boundaries  and  areas;  but  all 
the  accuracy  required  for  our  present  purpose  can  be  secured. 


3T8 


ECONOMIC  HISTORY . 


The  settled  area  of  1790,  as  indicated  by  the  line  traced,  is 
226,085  square  miles.  The  entire  body  of  continuously  set¬ 
tled  area  lay  between  31°  and  45°  north  latitude  and  67° 
and  83°  west  longitude. 

Outside  of  this  body  of  continuous  settlement  are  the 
smaller  areas  mentioned  above,  which,  added  to  the  main 
body  of  settled  area,  give  as  a  total  239,935  square  miles, 
the  aggregate  population  being  3,929,214,  and  the  average 
density  of  settlement  16.4  to  the  square  mile. 

In  1790  the  District  of  Maine  belonged  to  Massachusetts. 
Georgia  comprised  not  only  the  present  State  of  that  name, 
but  nearly  all  of  what  are  now  the  States  of  Alabama  and  Mis¬ 
sissippi.  The  States  of  Kentucky  and  Tennessee  were  then 
known  as  the  “Territory  south  of  the  Ohio  River,”  and  the 
present  States  of  Ohio,  Indiana,  Illinois,  Michigan,  Wisconsin, 
and  part  of  Minnesota,  as  the  “  Territory  northwest  of  the  Ohio 
River.”  Spain  claimed  possession  of  what  is  now  Florida, 
with  a  strip  along  the  southern  border  of  Alabama,  Missis¬ 
sippi,  and  all  of  the  region  west  of  the  Mississippi  River. 

An  inspection  of  the  maps  relating  to  the  earlier  census 
years  will  show  that  the  progress  of  population  westward 
across  the  Appalachian  system  has  taken  place,  in  the  main, 
along  four  lines.  The  northernmost  of  these,  which  was  the 
first  to  be  developed,  runs  through  Central  New  York,  fol¬ 
lowing  up,  generally,  the  Mohawk  River.  This  line  has, 
throughout  our  history,  been  one  of  the  principal  courses 
of  population  in  its  westward  flow.  The  second  crosses 
southern  Pennsylvania,  western  Maryland,  and  northern 
Virginia,  parallel  to  and  along  the  course  of  the  upper 
Potomac.  The  third  runs  through  Virginia,  passing  south- 
westward  down  the  great  Appalachian  valley,  crossing  thence 
over  into  Kentucky  and  Tennessee.  South  of  this,  the  prin¬ 
cipal  movement  westward  has  been  around  the  end  of  the 
Appalachian  chain,  through  Georgia  and  Alabama. 

1800. 

At  the  Second  Census,  that  of  1800,  the  frontier  line,  as 
it  appears  on  the  map,  has  been  rectified,  so  that  while  it 


INCREASE  OF  POPULATION. 


379 


embraces  282,208  square  miles,  it  describes  a  course,  when 
measured  in  the  same  manner  as  that  of  1790,  of  only  2,800 
lineal  miles.  The  advancement  of  this  line  has  taken  place 
in  every  direction,  though  in  some  parts  of  the  country  much 
more  markedly  than  in  others. 

In  Maine  and  New  Hampshire  there  is  apparent  only  a 
slight  northward  movement  of  settlement;  in  Vermont,  on 
the  other  hand,  while  the  settled  area  has  not  decidedy  in¬ 
creased,  its  density  has  become  greater.  Massachusetts 
shows  but  little  change,  but  in  Connecticut  the  settlements 
along  the  lower  course  of  the  Connecticut  River  have  appre¬ 
ciably  increased. 

In  New  York  settlement  has  poured  up  the  Hudson  to  the 
mouth  of  the  Mohawk,  and  thence  through  the  great  natural 
roadway  westward.  The  narrow  tongue  which  before  ex¬ 
tended  out  beyond  the  middle  of  the  State  has  now  widened 
until  it  spreads  from  the  southern  border  of  the  State  to  Lake 
Ontario.  A  narrow  belt  of  settlement  even  stretches  down 
the  St.  Lawrence,  and  along  all  the  northern  border  of  the 
State,  to  Lake  Champlain,  completely  surrounding  what 
may  be  characteristically  defined  as  the  Adirondack  region. 

In  Pennsylvania  settlements  have  extended  up  the  Susque- 
hanna  and  joined  the  New  York  groups,  leaving  as  yet  an 
unsettled  space  in  the  northeast  corner  of  the  State,  which 
comprises  a  body  of  rugged  mountain  country.  With  the 
exception  of  a  little  strip  along  the  western  border  of  Penn¬ 
sylvania,  the  northern  part  of  the  State,  west  of  the  Susque¬ 
hanna,  is  as  yet  entirely  without  inhabitants.  Population 
has  streamed  across  the  southern  half  of  the  State,  and  set¬ 
tled  in  a  dense  body  about  the  forks  of  the  Ohio  River,  at  the 
present  site  of  Pittsburgh,  and  thence  extended  slightly  into 
the  State  of  Ohio.  In  Virginia  we  note  but  little  change, 
although  there  is  a  general  extension  of  settlement,  with  an 
increase  in  density,  especially  along  the  coast.  North  Caro¬ 
lina  is  now  almost  entirely  covered  with  population;  the 
mountain  region  has,  generally  speaking,  been  nearly  all 
reclaimed  to  the  service  of  man.  In  South  Carolina  there 
is  a  general  increase  in  density  of  settlement,  while  the 


880 


ECONOMIC  HISTORY. 


southwestern  border  has  been  carried  down  until  now  the 
Altamaha  River  is  its  limit.  The  incipient  settlements,  in 
northern  Kentucky  have  spread  southward  across  the  State, 
and  even  into  Tennessee,  forming  a  junction  with  the  little 
settlement,  noted  at  the  date  of  the  last  census,  on  the  Cum¬ 
berland  River.  The  group  thus  formed  has  extended  down 
the  Ohio,  nearly  to  its  junction  with  the  Tennessee  and  the 
Cumberland,  and  across  the  Ohio  River  into  the  present  State 
of  Ohio,  where  we  note  the  beginning  of  Cincinnati.  Other 
infant  settlements  appear  at  this  date.  On  the  east  side  of 
the  Mississippi  River,  in  the  present  State  of  Mississippi,  is 
a  strip  of  settlement  along  the  bluffs  below  the  Yazoo 
bottom.  Besides  the  settlement  on  the  present  site  of  St. 
Louis,  not  at  this  time  within  the  United  States,  is  an  adja¬ 
cent  settlement  in  what  is  now  Illinois,  while  all  the  pioneer 
settlements  previously  noted  have  grown  to  a  greater  or  less 
extent. 

From  the  region  embraced  between  the  frontier  line  and 
the  Atlantic  must  be  deducted  the  Adirondack  tract,  in 
northern  New  York,  and  the  unsettled  region  in  northern 
Pennsylvania  already  referred  to;  so  that  the  actual  area  of 
settlement,  bounded  by  a  continuous  line,  is  to  be  taken  at 
271,908  square  miles.  All  this  lies  between  80°  45'  and 
45°  15'  north  latitude,  and  67°  and  88°  west  longitude. 

To  this  should  be  added  the  aggregate  extent  of  all  settle¬ 
ments  lying  outside  of  the  frontier  line,  which  collectively 
amount  to  88, 800  square  miles,  making  a  total  area  of  settle¬ 
ment  of  305,708  square  miles.  As  the  aggregate  population 
is  5,308,483,  the  average  density  of  settlement  is  17.4. 

The  infant  settlements  of  this  period  have  been  much  re¬ 
tarded  at  many  points  by  the  opposition  of  the  Indian  tribes ; 
but  in  the  neighborhood  of  the  more  densely  settled  portions 
of  the  northern  part  of  the  country  these  obstacles  have  been 
of  less  magnitude  than  farther  south.  In  Georgia,  espe¬ 
cially,  the  large  and  powerful  tribes  of  Creeks  and  Cherokees 
have  stubbornly  opposed  the  progress  of  population. 

During  the  decade  just  past  Vermont,  formed  from  a  part 
of  New  York,  has  been  admitted  to  the  Union;  also  Ken- 


INCREASE  OF  POPULATION. 


381 


tucky  and  Tennessee,  formed  from  the  “Territory  south  of 
the  River  Ohio ;  ”  Mississippi  Territory,  having  however  very 
different  boundaries  from  the  present  State  of  that  name, 
has  been  organized;  while  the  “territory  northwest  of  the 
River  Ohio”  has  been  divided  and  Indiana  Territory  organ¬ 
ized  from  the  western  portion. 

1810. 

At  1810  we  note  great  changes,  especially  the  extension  of 
the  sparse  settlements  of  the  interior.  The  hills  of  western 
New  York  have  become  almost  entirely  covered  with  popula¬ 
tion,  which  has  spread  along  the  south  shore  of  Lake  Erie 
well  over  into  Ohio,  and  has  effected  a  junction  with  the 
previously  existing  body  of  population  about  the  forks  of  the 
Ohio  River,  leaving  unsettled  an  included  heart-shaped  area 
in  northern  Pennsylvania,  which  comprises  the  rugged  coun¬ 
try  of  the  Appalachian  plateau.  The  occupation  of  the  Ohio 
River  has  now  become  complete,  from  its  head  to  its  mouth, 
with  the  exception  of  small  gaps  below  the  mouth  of  the 
Tennessee.  Spreading  in  every  direction  from  the  “  dark 
and  bloody  ground  ”  of  Kentucky,  settlement  covers  almost 
the  entire  State,  while  the  southern  border  line  has  been 
extended  to  the  Tennessee  River,  in  northern  Alabama.  In 
Georgia  settlements  are  still  held  back  by  the  Creek  and  the 
Cherokee  Indians,  although  in  1802  a  treaty  with  the  former 
tribe  relieved  the  southwestern  portion  of  the  State  of  their 
presence,  and  left  the  ground  open  for  occupancy  by  the 
whites.  In  Ohio  settlements,  starting  from  the  Ohio  River 
and  from  southwestern  Pennsylvania,  have  worked  northward 
and  westward,  until  they  cover  two  thirds  of  the  area  of  the 
State.  Michigan  and  Indiana  are  still  virgin  territory,  with 
the  exception  of  a  little  strip  about  Detroit,  in  the  former 
State,  and  a  small  area  in  the  southwestern  part  of  the  lat¬ 
ter.  St.  Louis,  from  a  fur-trading  post,  has  become  an 
important  centre  of  settlement,  population  having  spread 
northward  above  the  mouth  of  the  Missouri  and  southward 
along  the  Mississippi  to  the  mouth  of  the  Ohio.  At  the 
mouth  of  the  Arkansas,  in  what  is  now  the  State  of  Arkan- 


382 


ECONOMIC  HISTORY. 


sas,  is  a  similar  body  of  settlement.  The  transfer  of  the 
Territory  of  Louisiana  to  our  jurisdiction,  which  was  effected 
in  1803,  has  brought  into  the  country  a  large  body  of  popula¬ 
tion,  which  stretches  along  the  Mississippi  River  from  its 
mouth  nearly  up  to  the  present  northern  limit  of  the  State  of 
Louisiana,  up  the  Red  River  and  the  St.  Francis,  in  general 
occupying  the  alluvial  regions.  The  incipient  settlements 
noted  on  the  last  map  in  Mississippi  have  effected  a  junction 
with  those  of  Louisiana,  while  in  Lower  Alabama  and  Mis¬ 
sissippi  a  similar  patch  appears  upon  the  Mobile  and  the 
Pearl  rivers. 

In  this  decade  large  additions  have  been  made  to  the  terri¬ 
tory  of  the  United  States,  and  many  changes  have  been 
effected  in  the  lines  of  interior  division.  The  purchase  of 
Louisiana  has  added  1,124,685  square  miles,  an  empire  in  it¬ 
self,  to  the  United  States  and  has  given  to  us  absolute  control 
of  the  Mississippi  and  its  navigable  branches.  Georgia,  dur¬ 
ing  the  same  period,  has  ceded  to  the  United  States  the  por¬ 
tion  of  its  territory  which  now  constitutes  the  larger  part  of 
the  States  of  Alabama  and  Mississippi.  The  State  of  Ohio 
has  been  formed  from  a  portion  of  what  previously  was  known 
as  the  “  Territory  north  of  the  Ohio  River.  ”  Michigan  Terri¬ 
tory  has  been  erected,  comprising  what  is  now  the  lower  pen¬ 
insula  of  Michigan;  Indiana  Territory  has  been  restricted  to 
the  present  limits  of  the  State  of  that  name;  Illinois  Terri¬ 
tory  comprises  all  of  the  present  State  of  Illinois,  with  that  of 
Wisconsin  and  apart  of  Minnesota;  while  from  the  Louisiana 
purchase  has  been  carved  under  the  name  of  the  “  Territory 
of  Orleans  ”  all  that  part  of  the  present  State  of  Louisiana 
which  lies  west  of  the  Mississippi  river,  the  remainder  of  the 
great  territory  so  cheaply  acquired  from  France  being  known 
by  the  name  of  the  “  Louisiana  Territory.  ” 

At  this  date  the  frontier  line  is  2,900  miles  long  and  in¬ 
cludes  between  itself  and  the  Atlantic  408,895  square  miles. 
From  this  must  be  deducted  several  large  areas  of  unsettled 
land;  first,  the  area  in  northern  New  York,  now  somewhat 
smaller  than  ten  years  before,  but  still  bvno  means  inconsid- 
erable'in  extent;  second,  the  heart-shaped  area  in  north- 


INCREASE  OF  POPULATION. 


383 


western  Pennsylvania  embracing  part  of  the  Allegheny  pla¬ 
teau,  in  size  about  equal  to  the  unsettled  area  in  New  York; 
third,  a  strip  along  the  central  part  of  what  is  now  West  Vir¬ 
ginia,  extending  from  the  Potomac  southward,  taking  in  what 
is  now  a  part  of  eastern  Kentucky  and  southwestern  Virginia, 
and  extending  nearly  to  the  border  line  of  Tennessee;  fourth, 
a  comparatively  small  area  in  northern  Tennessee  upon  the 
Cumberland  plateau.  These  tracts  together  comprise  26,050 
square  miles,  making  the  actual  area  of  settlement  included 
within  the  frontier  line  382,845  square  miles.  All  this  lies 
between  latitude  29°  30'  and  45°  15'  north,  and  between  the 
meridians  of  67°  and  88°  30'  west. 

Beyond  the  frontier  there  are,  in  addition  to  the  steadily 
increasing  number  of  outposts  and  minor  settlements,  several 
considerable  bodies  of  population,  which  have  been  above 
noted.  The  aggregate  extent  of  these,  and  of  the  numerous 
small  patches  of  population  scattered  over  the  West  and 
South,  may  be  estimated  at  25,100  square  miles,  making  the 
total  area  of  settlement  in  1810  407, 945  square  miles ;  the 
aggregate  population  being  7, 239, 881,  and  the  average  density 
of  settlement  17.7  to  the  square  mile. 

Between  1800  and  1810  the  principal  territorial  changes 
have  been  as  follows:  Ohio  has  been  admitted,  and  the 
Territories  of  Illinois  and  Michigan  have  been  formed  from 
parts  of  Indiana  Territory. 

1820. 

The  decade  from  1810  to  1820  has  witnessed  several  terri¬ 
torial  changes.  Florida  at  this  date  (1820)  is  a  blank  upon 
the  map.  The  treaty  with  Spain,  which  gives  her  to  us,  is 
signed,  but  the  delivery  has  not  yet  taken  place.  Alabama 
and  Mississippi,  made  from  the  Mississippi  Territory,  have 
been  organized  and  admitted  as  States.  Indiana  and  Illinois 
appear  as  States  with  their  present  limits.  The  Territory  of 
Louisiana  has  been  admitted  as  a  State.  The  District  of 
Maine  has  also  been  erected  into  a  State.  Arkansas  Terri¬ 
tory  has  been  cut  from  the  southern  portion  of  the  Territory 
of  Louisiana.  The  Indian  Territory  has  been  constituted  to 


884 


ECONOMIC  HISTORY. 


serve  as  a  reservation  for  the  Indian  tribes.  Michigan 
Territory  has  been  extended  to  include  all  of  the  present 
States  of  Michigan,  Wisconsin,  and  part  of  Minnesota. 
That  part  of  the  old  Louisiana  Territory  remaining,  after 
cutting  out  Arkansas  and  Indian  Territory,  has  received  the 
name  of  “Missouri  Territory.” 

Again,  in  1820,  we  note  a  great  change  in  regard  to  the 
frontier  line.  It  has  become  vastlv  more  involved  and  com- 

t 

plex,  extending  from  southeastern  Michigan,  on  Lake  St. 
Clair,  soutliAvestward  into  what  is  now  Missouri;  thence 
making  a  great  semicircle  to  the  eastward,  it  sweeps  west 
again  around  a  body  of  population  in  Louisiana,  and  ends  on 
the  Gulf  coast  in  that  State.  The  area  included  by  it  has 
immensely  increased,  but  much  of  this  increase  is  balanced 
by  the  great  extent  of  unsettled  land  included  within  it. 

Taking  up  the  changes  in  detail,  we  note,  first,  the  great 
increase  in  the  population  of  central  New  York,  a  belt  of 
increased  settlement  having  swept  up  the  Mohawk  valley  to 
Lake  Ontario,  and  along  its  shore  nearly  to  the  Niagara 
River.  A  similar  increase  is  seen  about  the  forks  of  the 
Ohio  River,  while  in  northern  Pennsylvania  the  unsettled 
region  on  the  Appalachian  plateau  has  sensibly  decreased  in 
size.  The  unsettled  area  in  western  Virginia  and  eastern 
Kentucky  has  very  greatly  diminished,  population  having 
extended  almost  entirely  over  the  Allegheny  region  in  these 
States.  The  little  settlements  about  Detroit  have  extended 
and  spread  along  the  shore  of  Lake  Erie,  until  they  have 
joined  those  in  Ohio.  The  frontier  line  in  Ohio  has  crept 
northward  and  westward,  leaving  only  the  northwestern 
corner  of  the  State  unoccupied.  Population  has  spread 
northward  from  Kentucky  and  westward  from  Ohio  into 
southern  Indiana,  covering  sparsely  the  lower  third  of  that 
State.  The  groups  of  population  around  St.  Louis,  which  at 
the  time  of  the  previous  census  were  enjoying  a  rapid 
growth,  have  extended  widely,  making  a  junction  with  the 
settlements  of  Kentucky  and  Tennessee,  along  a  broad  belt 
in  southern  Illinois ;  following  the  main  watercourses,  popu¬ 
lation  has  gone  many  scores  of  miles  up  the  Mississippi  and 


INCREASE  OF  POPULATION. 


385 


the  Missouri  rivers.  The  settlements  in  Alabama,  which 
up  to  this  time  had  been  very  much  retarded  by  the  Creeks, 
were  rapidly  re-enforced  and  extended,  in  consequence  of  the 
victory  of  General  Jackson  over  this  tribe  and  the  subse¬ 
quent  cession  of  portions  of  this  territory.  Immigration  to 
Alabama  has  already  become  considerable,  and  in  a  short 
time  the  whole  central  portion  of  the  State,  embracing  a 
large  part  of  the  region  drained  by  the  Mobile  River  and  its 
branches,  will  be  covered  by  settlements,  to  extend  north¬ 
ward  and  effect  a  junction  with  the  Kentucky  and  Tennessee 
settlements,  and  westward  across  the  lower  part  of  Missis¬ 
sippi  until  they  meet  the  Louisiana  settlements.  In  Georgia 
the  Cherokees  and  the  Creeks  still  hold  settlement  back 
along  the  line  of  the  Altamaha  River.  There  are,  however, 
scattered  bodies  of  population  in  various  parts  of  the  State, 
though  of  small  extent.  In  Louisiana  we  note  a  gradual 
increase  of  the  extent  of  redeemed  territory,  which  appears 
to  have  been  limited  almost  exactly  by  the  borders  of  the 
alluvial  region.  In  Arkansas  the  settlements,  which  we  saw 
at  1810  at  the  mouth  of  the  Arkansas  River,  have  extended 
up  the  bottom  lands  of  that  river  and  of  the  Mississippi,  form¬ 
ing  a  body  of  population  of  considerable  size.  Besides  these 
a  small  body  is  found  in  the  southern  central  part  of  the 
State,  at  the  southeastern  base  of  the  hill  region,  and  another 
in  the  prairie  region  in  the  northern  part. 

The  frontier  line  now  has  a  length  of  4,100  miles,  em¬ 
bracing  an  area,  after  taking  out  all  the  unsettled  regions 
included  between  it,  the  Atlantic,  and  the  Gulf,  of  504,517 
square  miles,  all  lying  between  29°  30'  and  45°  30'  north 
latitude,  and  between  67°  and  93°  45'  west  longitude.  Out¬ 
side  the  frontier  line  are  some  bodies  of  population  on  the 
Arkansas,  White,  and  Washita  rivers,  in  Arkansas,  as  before 
noted,  as  well  as  some  small  bodies  in  the  Northwest.  Com¬ 
puting  these  at  4,200  square  miles  in  the  aggregate,  we  have 
a  total  settled  area  of  508,717  square  miles;  the  aggregate 
population  being  9,633,822,  and  the  average  density  of  set¬ 
tlement  18.9  to  the  square  mile. 

25 


386 


ECONOMIC  HISTORY. 


1830. 

In  the  decade  from  1820  to  1830  other  territorial  changes 
have  occurred.  In  the  early  part  of  the  decade  the  final 
transfer  of  Florida  from  Spanish  jurisdiction  was  effected, 
and  it  became  a  Territory  of  the  United  States.  Missouri 
has  been  carved  from  the  southeastern  part  of  the  old  Mis¬ 
souri  Territory,  and  admitted  as  a  State.  Otherwise  the 
States  and  Territories  have  remained  nearly  as  before. 
Settlement  during  the  decade  has  again  spread  greatly. 
The  westward  extension  of  the  frontier  does  not  appear  to 
have  been  so  great  as  in  some  former  periods,  the  energies 
of  the  people  being  mainly  given  to  filling  up  the  included 
areas.  In  other  words,  the  decade  from  1810  to  1820  seems 
to  have  been  one  rather  of  blocking  out  work  which  the  suc¬ 
ceeding  decade  has  been  largely  occupied  in  completing. 

During  this  period  the  Indians,  especially  in  the  South, 
have  still  delayed  settlement  to  a  great  extent.  The  Creeks 
and  the  Cherokees  in  Georgia  and  Alabama,  and  the  Choc¬ 
taws  and  the  Chickasaws  in  Mississippi,  occupy  large  areas 
of  the  best  portions  of  those  States  and  successfully  resist 
encroachment  upon  their  territory.  Georgia,  however,  has 
witnessed  a  large  increase  in  settlement  during  the  decade. 
The  settlements  which  have  heretofore  been  stayed  on  the  line 
of  the  Altamaha  spread  westward  across  the  central  portion 
of  the  State  to  its  western  boundary,  where  they  have  struck 
against  the  barrier  of  the  Creek  territory.  Stopped  at  this 
point,  they  have  moved  southward  down  into  the  southwest 
corner,  and  over  into  Florida,  extending  even  to  the  Gulf 
coast.  Westward  they  have  stretched  across  the  southern 
part  of  Alabama,  and  joined  that  body  of  settlement  which 
was  previously  formed  in  the  drainage-basin  of  the  Mobile 
River.  The  Louisiana  settlements  have  but  slightly  in¬ 
creased,  and  no  great  change  appears  to  have  taken  place  in 
Mississippi,  owing  largely  to  the  cause  above  noted,  namely, 
the  occupancy  of  the  soil  by  Indians.  In  Arkansas  the  spread 
of  settlement  has  been  in  a  strange  and  fragmentary  way. 
A  line  reaches  from  Louisiana  up  the  Arkansas  River  to  the 


INCREASE  OF  POPULATION. 


387 


State  line,  where  it  is  stopped  abruptly  by  the  boundary  of 
the  Indian  Territory.  It  extends  up  the  Mississippi,  and 
joins  the  great  body  of  population  in  Tennessee.  A  branch 
extends  northeastward  from  near  Little  Rock  to  the  northern 
portion  of  the  State.  All  these  settlements  within  Arkansas 
Territory  are  as  yet  very  sparse.  In  Missouri  the  principal 
extension  of  settlement  has  been  in  a  broad  belt  up  the  Mis¬ 
souri  River,  reaching  to  the  present  site  of  Kansas  City,  at 
the  mouth  of  the  Kansas  River,  where  quite  a  dense  body  of 
population  appears.  Settlement  has  progressed  in  Illinois, 
from  the  Mississippi  River  eastward  and  northward,  covering 
more  than  half  the  State.  In  Indiana  it  has  followed  up  the 
Wabash  River,  and  thence  has  spread  until  it  reaches  nearly 
to  the  north  line  of  the  State.  But  little  of  Ohio  remains 
unsettled.  The  sparse  settlements  about  Detroit,  in  Michi¬ 
gan  Territory,  have  broadened  out,  extending  into  the  inte¬ 
rior  of  the  State,  while  isolated  patches  have  appeared  in 
various  other  localities. 

Turning  to  the  more  densely  settled  parts  of  the  country, 
we  find  that  settlement  is  slowly  making  its  way  northward 
in  Maine,  although  discouraged  by  the  poverty  of  the  soil 
and  the  severity  of  the  climate.  The  unsettled  tract  in 
northern  New  York  is  decreasing,  but  very  slowly,  as  is 
also  the  case  with  the  unsettled  area  in  northern  Pennsylva¬ 
nia.  In  western  Virginia  the  unsettled  tracts  are  reduced 
to  almost  nothing,  while  the  vacant  region  in  eastern  Ten¬ 
nessee,  on  the  Cumberland  plateau,  is  rapidly  diminishing. 

At  this  date,  1830,  the  frontier  line  has  a  length  of  5,300 
miles,  and  the  aggregate  area  now  embraced  between  the 
ocean,  the  Gulf,  and  the  frontier  line  is  725,406  square 
miles.  Of  this,  however,  not  less  than  97,389  square  miles 
are  comprised  within  the  included  vacant  tracts,  leaving 
only  628,017  square  miles  as  the  settled  area  within  the 
frontier  line,  all  of  which  lies  between  latitude  29°  15'  and 
46°  15;  north,  and  between  longitude  67°  and  95°  west. 

Outside  the  body  of  continuous  settlement  are  no  longer 
found  large  groups,  but  several  small  patches  of  population 
appear  in  Ohio,  Indiana,  Illinois,  Michigan,  and  Wisconsin, 


388 


ECONOMIC  HISTORY . 

\ 

aggregating  4,700  square  miles,  making  a  total  settled  area, 
in  1830,  of  632,717  square  miles.  As  the  aggregate  popula¬ 
tion  is  12,866,020,  the  average  density  of  settlement  is  20.3 
to  the  square  mile. 

1840.  1 

„  During  the  decade  ending  in  1840  the  State  of  Michigan 
has  been  created  with  its  present  limits,  the  remainder  of  the 
old  territory  being  known  as  Wisconsin  Territory.  Iowa 
Territory  has  been  created  from  a  portion  of  Missouri  Terri¬ 
tory,  embracing  the  present  State  of  Iowa  and  the  western 
part  of  Minnesota,  and  Arkansas  has  been  admitted  to  the 
Union. 

In  1840  we  find,  by  examining  the  map  of  population  that 
the  process  of  filling  up  and  completing  the  work  blocked 
out  between  1810  and  1820  has  been  carried  still  farther. 
From  Georgia,  Alabama,  and  Mississippi  the  Cherokee, 
Creek,  Choctaw,  and  Chickasaw  Indians,  who,  at  the  time 
of  the  previous  census,  occupied  large  areas  in  these  States, 
and  formed  a  very  serious  obstacle  to  settlement,  have  been 
removed  to  the  Indian  Territory,  and  their  country  has  been 
opened  up  to  settlement.  Within  the  two  or  three  years 
which  have  elapsed  since  the  removal  of  these  Indians  the 
lands  relinquished  by  them  have  been  entirely  taken  up, 
and  the  country  has  been  covered  with  a  comparatively  dense 
settlement.  In  northern  Illinois,  the  Sac  and  Fox  and 
Pottawatomie  tribes  having  been  removed  to  the  Indian 
Territory,  their  country  has  been  promptly  taken  up,  and 
we  find  now  settlements  carried  over  the  whole  extent  of  In¬ 
diana,  Illinois,  and  across  Michigan  and  Wisconsin  as  far 
north  as  the  forty-third  parallel.  Population  has  crossed 
the  Mississippi  River  into  Iowa  Territory,  and  occupies  a 
broad  belt  up  and  down  that  stream.  In  Missouri  the  settle¬ 
ments  have  spread  northward  from  the  Missouri  River  nearly 
to  the  boundary  of  the  State,  and  southward  till  they  cover 
most  of  the  southern  portion,  and  make  connection  in  two 
places  with  the  settlements  of  Arkansas.  The  unsettled  area 
found  in  southern  Missouri,  together  with  that  in  north- 


INCREASE  OF  POPULATION. 


889 


western  Arkansas,  is  due  to  the  hilly  and  rugged  nature  of 
the  country,  and  to  the  poverty  of  the  soil,  as  compared  with 
the  rich  prairie  lands  all  around.  In  Arkansas  the  settle¬ 
ments  remain  sparse,  and  have  spread  widely  away  from  the 
streams,  covering  much  of  the  prairie  parts  of  the  State. 
There  is,  besides  the  area  in  northwestern  Arkansas  just 
mentioned,  a  large  area  in  the  northeastern  part  of  the 
State,  comprised  almost  entirely  within  the  alluvial  regions 
of  the  St.  Francis  River,  and  also  one  in  the  southern  portion, 
extending  over  into  northern  Louisiana  which  is  entirely  in 
the  fertile  prairie  section.  The  fourth  unsettled  region  lies 
in  the  southwest  part  of  the  State. 

In  the  older  States  we  note  a  gradual  decrease  in  the  unset¬ 
tled  areas,  as  in  Maine  and  in  New  York.  In  northern  Penn¬ 
sylvania  the  unsettled  section  has  entirely  disappeared.  A 
small  portion  of  the  unsettled  patch  on  the  Cumberland 
plateau  still  remains.  In  southern  Georgia  the  Okeefenokee 
swamp  and  the  pine  barrens  adjacent  have  thus  far  repelled 
settlement,  although  population  has  increased  in  Florida, 
passing  entirely  around  this  area  to  the  south.  The  greater 
part  of  Florida,  however,  including  nearly  all  the  peninsula 
and  several  large  areas  along  the  Gulf  coast,  still  remains 
without  settlement.  This  is  doubtless  due,  in  part,  to  the 
nature  of  the  country,  being  alternately  swamp  and  hum¬ 
mock,  and  in  part  to  the  hostility  of  the  Seminole  Indians, 
who  still  occupy  nearly  all  of  the  peninsula. 

The  frontier  line  in  1840  has  a  length  of  3,300  miles. 
This  shrinking  in  its  length  is  due  to  its  rectification  on  the 
northwest  and  southwest,  owing  to  the  filling  out  of  the  entire 
interior.  It  encloses  an  area  of  900,658  square  miles,  all 
lying  between  latitude  29°  and  46°  30'  north,  and  longitude 
67°  and  95°  30'  west.  The  vacant  tracts  have,  as  noted 
above,  decreased,  although  they  are  still  quite  considerable 
in  Missouri  and  Arkansas.  The  total  area  of  the  vacant 
tracts  is  95,516  square  miles.  The  settled  area  outside  the 
frontier  line  is  notably  small,  and  amounts,  in  the  aggregate, 
to  only  2,150  miles,  making  the  entire  settled  area  807,292 
square  miles  in  1840.  The  aggregate  population  being 
17,069,453,  the  average  density  is  21.1  to  the  square  mile. 


890 


ECONOMIC  HISTORY. 


1850. 

Between  1840  and  1850  the  limits  of  our  country  have 
been  further  extended  by  the  annexation  of  the  State  of 
Texas  and  of  territory  acquired  from  Mexico  by  the  treaty  of 
Guadalupe  Hidalgo.  The  States  of  Iowa,  Wisconsin,  and 
Florida  have  been  admitted  to  the  Union,  and  the  Terri¬ 
tories  of  Minnesota,  Oregon,  and  New  Mexico  have  been 
created.  An  examination  of  the  maps  shows  that  the  fron¬ 
tier  line  has  changed  very  little  during  this  decade.  At  the 
western  border  of  Arkansas  the  extension  of  settlement  is 
peremptorily  limited  by  the  boundary  of  the  Indian  Terri¬ 
tory;  but  curiously  enough  also,  the  western  boundary  of 
Missouri  puts  almost  a  complete  stop  to  all  settlement,  not¬ 
withstanding  that  some  of  the  most  densely  populated  por¬ 
tions  of  the  State  lie  directly  on  that  boundary.  In  Iowa 
settlements  have  made  some  advance,  moving  up  the  Mis¬ 
souri,  the  Des  Moines,  and  other  rivers.  The  settlements 
in  Minnesota  at  and  about  St.  Paul,  which  appeared  in  1840, 
are  greatly  extended  up  and  down  the  Mississippi  River, 
while  other  scattering  bodies  of  population  appear  in  north¬ 
ern  Wisconsin.  In  the  southern  part  of  the  State  settlement 
has  made  considerable  advance,  especially  in  a  northeastern 
direction,  towards  Green  Bay.  In  Michigan  the  change  has 
been  very  slight. 

Turning  to  the  southwest  we  find  Texas,  for  the  first  time 
on  the  map  of  the  United  States,  with  a  considerable  extent 
of  settlement ;  in  general,  however,  it  is  very  sparse,  most 
of  it  lying  in  the  eastern  part  of  the  State,  and  being  largely 
dependent  upon  the  grazing  industry. 

The  included  unsettled  areas  now  are  very  small  and  few 
in  number.  There  still  remains  one  in  southern  Missouri, 
in  the  hilly  country ;  a  small  one  in  northeastern  Arkansas,  in 
the  swampy  and  alluvial  region;  and  one  in  the  similar 
country  in  the  Yazoo  bottom-lands.  Along  the  coast  of 
Florida  are  found  two  patches  of  considerable  size,  which  are 
confined  to  the  swampy  coast  regions.  The  same  is  the  case 
along  the  coast  of  Louisiana.  The  sparse  settlements  of 


INCREASE  OF  POPULATION. 


391 


Texas  are  also  interspersed  with  several  patches  devoid  of 
settlement.  In  southern  Georgia  the  large  vacant  space 
heretofore  noted,  extending  also  into  northern  Florida,  has 
entirely  disappeared,  and  the  Florida  settlements  have  al¬ 
ready  reached  southward  to  a  considerable  distance  in  the 
peninsula,  being  now  free  to  extend  without  fear  of  hostile 
Seminoles,  the  greater  part  of  whom  have  been  removed  to 
the  Indian  Territory. 

The  frontier  line,  which  now  extends  around  a  considerable 
part  of  Texas  and  issues  on  the  Gulf  coast  at  the  mouth  of  the 
Nueces  River,  is  4, 500  miles  in  length.  The  aggregate  area  in¬ 
cluded  by  it  is  1,005,213  square  miles,  from  which  deduction 
is  to  be  made  for  vacant  spaces,  in  all,  64,339  square  miles. 
The  isolated  settlements  lying  outside  this  body  in  the  west¬ 
ern  part  of  the  country  amount  to  4,775  square  miles. 

But  it  is  no  longer  by  a  line  drawn  around  from  the  St. 
Croix  River  to  the  Gulf  of  Mexico  that  we  embrace  all  the 
population  of  the  United  States,  excepting  only  a  few  outly¬ 
ing  posts  and  small  settlements.  We  may  now,  from  the 
Pacific,  run  a  line  around  80,000  miners  and  adventurers, 
the  pioneers  of  more  than  one  State  of  the  Union  soon  to 
arise  on  that  coast.  This  body  of  settlement  has  been 
formed,  in  the  main,  since  the  acquisition  of  the  territory  by 
the  United  States,  and,  it  might  even  be  said,  within  the 
last  year  (1849-50),  dating  from  the  discovery  of  gold  in 
California.  These  settlements  may  be  computed  rudely  at 
33,600  square  miles,  making  a  total  area  of  settlement  at 
that  date  of  979,249  square  miles,  the  aggregate  population 
being  23,191,876  and  the  average  density  of  settlement  23.7 
to  the  square  mile. 

I860. 

Between  1850  and  1860  the  territorial  changes  noted  are 
as  follows :  the  strip  of  Arizona  and  New  Mexico  south  of 
the  Gila  River  has  been  acquired  from  Mexico  by  the  Gads¬ 
den  purchase  (1853) ;  Minnesota  Territory  has  been  admitted 
as  a  State;  Kansas  and  Nebraska  Territories  have  been 
formed  from  parts  of  Missouri  Territory;  California  and 


392 


ECONOMIC  HISTORY. 


Oregon  have  been  admitted  as  States,  while,  in  the  unsettled 
parts  of  the  Cordilleran  region,  two  new  Territories  (Utah 
and  Washington)  have  been  formed  out  of  parts  of  that  terra 
incognita  which  we  bought  from  France  as  a  part  of  Louisi¬ 
ana,  and  of  that  which  we  acquired  by  conquest  from  Mexico. 
At  this  date  we  note  the  first  extension  of  settlements  beyond 
the  line  of  the  Missouri  River.  The  march  of  settlement  up 
the  slope  of  the  great  plains  has  begun.  In  Kansas  and  Ne¬ 
braska  population  is  now  found  beyond  the  97th  meridian. 
Texas  has  filled  up  even  more  rapidly,  its  extreme  settle¬ 
ments  reaching  to  the  lOOtli  meridian,  while  the  gaps  noted 
at  the  date  of  the  last  census  have  all  been  filled  by  popula¬ 
tion.  The  incipient  settlements  about  St.  Paul,  in  Minnesota, 
have  grown  like  Jonah’s  gourd,  spreading  in  all  directions, 
and  forming  a  broad  band  of  union  with  the  main  body  of  set¬ 
tlement  down  the  line  of  the  Mississippi  River.  In  Iowa  set¬ 
tlements  have  crept  steadily  northwestward  along  the  course 
of  the,  drainage,  until  the  State  is  nearly  covered.  Following 
up  the  Missouri,  population  has  reached  out  into  the  south¬ 
eastern  corner  of  the  present  area  of  Dakota.  In  Wisconsin 
the  settlements  have  moved  at  least  one  degree  farther  north, 
wdiile  in  the  lower  peninsula  of  Michigan  they  have  spread  up 
the  lake  shores,  nearly  encircling  it  on  the  side  next  Lake 
Michigan.  On  the  upper  peninsula  the  little  settlements 
which  appeared  in  1850  in  the  copper  region  on  Keeweenaw 
Point  have  extended  and  increased  greatly  in  density  as  that 
mining  interest  has  developed  in  value.  In  northern  New 
York  there  is  apparently  no  change  in  the  unsettled  area.  In 
northern  Maine  we  note,  for  the  first  time,  a  decided  move¬ 
ment  towards  the  settlement  of  its  unoccupied  territory,  in 
the  extension  of  the  settlements  on  its  eastern  and  northern 
border  up  the  St.  John  River.  The  unsettled  regions  in  south¬ 
ern  Missouri,  northeastern  Arkansas,  and  northwestern  Mis¬ 
sissippi  have  become  sparsely  covered  by  population.  Along 
the  Gulf  coast  there  is  little  or  no  change.  There  is  to  be 
noted  a  slight  extension  of  settlement  southward  in  the  pen¬ 
insula  of  Florida. 

The  frontier  line  now  measures  5,300  miles,  and  cm- 


INCREASE  OF  POPULATION. 


393 


braces  1,126,518  square  miles,  lying  between  latitude  28°  30' 
and  47°  30'  north,  and  between  longitude  67°  and  99°  30' 
west.  From  this  deduction  should  be  made  on  account  of 
vacant  spaces,  amounting  to  39,139  square  miles,  found 
mainly  in  New  York  and  along  the  Gulf  coast.  The  outly¬ 
ing  settlements  beyond  the  100th  meridian  are  now  numer¬ 
ous.  They  include,  among  others,  a  strip  extending  far  up 
the  Rio  Grande  in  Texas,  embracing  7,475  square  miles  (a 
region  given  over  to  the  raising  of  sheep),  while  the  Pacific 
settlements,  now  comprising  one  sovereign  State,  are  nearly 
three  times  as  extensive  as  .at  1850,  embracing  99,900 
square  miles.  The  total  area  of  settlement  in  1860  is  thus 
1,194,754  square  miles;  the  aggregate  population  is  now 
31,443,321,  and  the  average  density  of  settlement  26.3  to 
the  square  mile. 

1870. 

During  the  decade  from  1860  to  1870  a  number  of  territo¬ 
rial  changes  have  been  effected  in  the  extreme  West.  Ari¬ 
zona,  Colorado,  Dakota,  Idaho,  Montana,  Nevada,  and 
Wyoming  have  been  organized  as  Territories.  Kansas, 
Nebraska,  and  Nevada  have  been  admitted  as  States.  West 
Virginia  has  been  cut  off  from  the  mother  Commonwealth 
and  made  a  separate  State. 

In  1870  we  note  a  gradual  and  steady  extension  of  the  fron¬ 
tier  line  westward  over  the  great  plains.  The  unsettled  areas 
in  Maine,  New  York,  and  Florida  have  not  greatly  dimin¬ 
ished,  but  in  Michigan  the  extension  of  the  lumber  interests 
northward  and  inward  from  the  Lake  shore  has  reduced  con¬ 
siderably  the  unsettled  portion.  On  the  upper  peninsula 
the  settlements  have  increased  somewhat,  owing  to  the  dis¬ 
covery  of  the  rich  iron  deposits  destined  to  play  so  important 
a  part  in  the  manufacturing  industry  of  the  country. 

Settlement  has  spread  westward  to  the  boundary  of  the 
State  in  southern  Minnesota,  and  up  the  Big  Sioux  River  in 
southeastern  Dakota.  Iowa  is  entirely  reclaimed,  excepting 
a  small  area  of  perhaps  a  thousand  square  miles  in  its  north¬ 
western  corner.  Through  Kansas  and  Nebraska  the  frontier 


394 


ECONOMIC  HISTORY . 


line  lias  moved  steadily  westward,  following  in  general  the 
courses  of  the  larger  streams  and  of  the  newly  constructed 
railroads.  The  frontier  in  Texas  has  changed  but  little, 
that  little  consisting  of  a  general  westward  movement.  In 
the  Cordilleran  region  settlements  have  extended  but  slowly. 
Those  upon  the  Pacific  coast  show  little  change,  either  in 
extent  or  in  density.  In  short,  we  see  everywhere  the 
effects  of  the  war  in  the  partial  stoppage  of  the  progress  of 
development. 

The  settlements  in  the  West,  beyond  the  frontier  line  have 
arranged  themselves  mainly  in  three  belts.  The  most  east¬ 
ern  of  these  is  located  in  central  Colorado,  New  Mexico, 
and  Wyoming,  along  the  eastern  base  of  and  among  the 
Pocky  mountains.  To  this  region  settlement  was  first  at¬ 
tracted  in  1859  and  1860  by  discovery  of  mineral  deposits, 
and  has  been  retained  by  the  richness  of  the  soil  and  by 
the  abundance  of  water  for  irrigation,  which  have  promoted 
the  agricultural  industry. 

The  second  belt  of  settlement  is  that  of  Utah,  settled  in 
184T  by  the  Mormons  fleeing  from  Illinois.  This  community 
then  differed,  and  still  differs,  radically  from  that  of  the 
Rocky  mountains,  being  essentially  agricultural,  mining 
having  been  discountenanced  from  the  first  by  the  church 
authorities,  as  tending  to  fill  the  “  Promised  Land  ”  with 
Gentile  adventurers,  and  thereby  imperil  Mormon  institu¬ 
tions.  The  settlements  of  this  group,  as  seen  on  the  map  for 
1870,  extend  from  southern  Idaho  southward  through  cen¬ 
tral  Utah,  and  along  the  eastern  base  of  the  Wahsatch  range 
into  northern  Arizona.  They  consist  mainly  of  scattered 
hamlets  and  small  towns,  about  which  are  grouped  the  farms 
of  the  communities. 

The  third  strip  is  that  in  the  Pacific  States  and  Territo¬ 
ries,  extending  from  Washington  Territory  southward  to 
southern  California  and  eastward  to  the  system  of  “sinks,” 
in  western  Nevada.  This  group  of  population  owes  its  ex¬ 
istence  to  the  mining  industry,  the  moving  cause  in  nearly 
all  westward  migrations.  Originated  in  1849  by  a  “stam¬ 
pede  ”  the  like  of  which  the  world  had  never  before  seen,  it 


INCREASE  OF  POPULATION. 


395 


has  grown  by  successive  impulses  as  new  fields  for  rapid 
money-getting  have  been  developed.  Latterly,  however,  the 
value  of  this  region  to  the  agriculturist  has  been  recognized, 
and  the  character  of  the  occupations  of  the  people  is  under¬ 
going  a  marked  change. 

These  three  great  Western  groups  comprise  nine  tenths  of 
the  population  west  of  the  frontier  line.  The  remainder  is 
scattered  about  in  the  valleys  and  the  mountains  of  Montana, 
Idaho,  and  Arizona,  at  military  posts,  isolated  mining 
camps,  and  on  cattle  ranches. 

The  frontier  line  in  1870  embraces  1,178,068  square 
miles,  all  between  27°  15'  and  47°  30'  north  latitude,  and 
between  67°  and  99°  45'  west  longitude.  From  this,  how¬ 
ever,  deduction  is  to  be  made  of  37,739  square  miles,  on 
account  of  interior  spaces  containing  no  population.  To 
what  remains  we  must  add  11,810  square  miles  on  account 
of  settled  tracts  east  of  the  100th  meridian,  lying  outside  of 
the  frontier  line,  and  120,100  square  miles  on  account  of 
settlements  in  the  Cordilleran  region  and  on  the  Pacific 
coast,  making  the  total  area  of  settlement  for  1870  not  less 
than  1,272,239  square  miles,  the  aggregate  population  being 
38,558,371,  and  the  average  density  of  settlement  30.3  to 
the  square  mile. 

1880. 

In  tracing  the  history  of  the  settlement  of  our  country  we 
are  now  brought  down  to  the  latest  census,  that  of  1880. 
During  the  decade  just  passed  Colorado  has  been  added  to 
the  sisterhood  of  States.  The  first  point  that  strikes  us  in 
examining  the  map  showing  the  areas  of  settlement  at  this 
date,  as  compared  with  previous  ones,  is  the  great  extent  of 
territory  which  has  been  brought  under  occupation  during 
the  past  ten  years.  Not  only  has  settlement  spread  west¬ 
ward  over  large  areas  in  Dakota,  Nebraska,  Kansas,  and 
Texas,  thus  moving  the  frontier  line  of  the  main  body  of 
settlement  westward  many  scores  of  miles,  but  the  isolated 
settlements  of  the  Cordilleran  region  and  of  the  Pacific  coast 
show  enormous  accessions  of  occupied  territory. 


396 


ECONOMIC  HISTORY. 


The  migration  of  farming  population  to  the  northeastern 
part  of  Maine  has  widened  the  settled  area  to  a  marked  ex¬ 
tent,  probably  more  than  has  been  done  during  any  previous 
decade.  The  vacant  space  in  the  Adirondack  region  of 
northern  New  York  has  been  lessened  in  size,  and  its  limits 
reduced  practically  to  the  actual  mountain  tract.  The  most 
notable  change,  however,  in  New  England  and  the  Middle 
States,  including  Ohio  and  Indiana,  has  been  the  increase 
in  density  of  population  and  the  migration  to  cities,  with 
the  consequent  increase  of  the  urban  population,  as  indicated 
by  the  number  and  the  size  of  the  spots  representing  these 
cities  upon  the  map.  Throughout  the  Southern  States  there 
is  to  be  noted  not  only  a  general  increase  in  the  density  of 
population  and  a  decrease  of  unsettled  areas,  but  a  greater 
approach  to  uniformity  of  settlement  throughout  the  whole 
region.  The  unsettled  area  of  the  peninsula  of  Florida  has 
decreased  decidedly  while  the  vacant  spaces  heretofore  seen 
along  the  upper  coast  of  Florida  and  Louisiana  have  entirely 
disappeared.  Although  the  Appalachian  mountain  system  is 
still  distinctly  outlined  by  its  general  lighter  color  on  the 
map,  its  density  of  population  more  nearly  approaches  that 
of  the  country  on  the  east  and  on  the  west.  In  Michigan 
there  is  seen  a  very  decided  increase  of  the  settled  region. 
Settlements  have  not  only  surrounded  the  head  of  the  lower 
peninsula,  but  they  leave  only  a  very  small  body  of  unsettled 
country  in  the  interior.  In  the  upper  peninsula  the  copper 
and  the  iron  interests,  and  the  railroads  which  subserve  them, 
have  peopled  quite  a  large  extent  of  territory.  In  Wisconsin 
the  unsettled  area  is  rapidly  decreasing  as  railroads  stretch 
their  arms  out  over  the  vacant  tracts.  In  Minnesota  and  in 
eastern  Dakota  the  building  of  railroads,  and  the  develop¬ 
ment  of  the  latent  capabilities  of  this  region  in  the  cultiva¬ 
tion  of  wheat,  have  caused  a  rapid  flow  of  settlement,  and 
now  the  frontier  line  of  population,  instead  of  returning  to 
Lake  Michigan,  as  it  did  ten  years  ago,  meets  the  boundary 
line  of  the  British  possessions  west  of  the  97th  meridian. 
The  settlements  iii  Kansas  and  Nebraska  have  made  great 
strides  over  the  plains,  reaching  at  several  points  the  boun- 


INCREASE  OF  POPULATION. 


397 


clary  of  the  humid  region,  so  that  their  westward  extension 
beyond  this  point  is  to  be  governed  hereafter  by  the  supply 
of  water  in  the  streams.  As  a  natural  result,  we  see  settle¬ 
ments  following  these  streams  in  long  ribbons  of  population. 
In  Nebraska  these  narrow  belts  have  reached  the  western 
boundary  of  the  State  at  two  points:  one  upon  the  South 
Platte,  and  the  other  upon  the  Republican  River.  In  Kansas, 
too,  the  settlements  have  followed  the  Kansas  River  and  its 
branches  and  the  Arkansas  nearly  to  the  western  boundary 
of  the  State.  Texas  also  has  made  great  strides,  both  in  the 
extension  of  the  frontier  line  of  settlement  and  in  the  in¬ 
crease  in  the  density  of  population,  due  both  to  the  building 
of  railroads  and  to  the  development  of  the  cattle,  sheep,  and 
agricultural  interests.  The  heavy  population  in  the  prairie 
portions  of  the  State  is  explained  by  the  railroads  which  now 
traverse  them.  In  Dakota,  besides  the  agricultural  region 
in  the  eastern  part  of  the  Territory,  we  note  the  formation 
of  a  body  of  settlement  in  the  Black  Hills,  in  the  southwest 
corner,  which,  in  1870,  was  a  part  of  the  reservation  of  the 
Sioux  Indians.  This  settlement  is  the  result  of  the  discov¬ 
ery  of  valuable  gold  deposits.  In  Montana  there  appears  a 
great  extension  of  the  settled  area,  which,  as  it  is  mainly 
due  to  agricultural  interests,  is  found  chiefly  along  the 
courses  of  the  streams.  Mining  has,  however,  played  not  a 
small  part  in  this  increase  in  settlement.  Idaho,  too,  shows 
a  decided  growth  from  the  same  causes.  The  small  settle¬ 
ments  which,  in  1870,  were  located  about  Bois6  City,  and 
near  the  mouth  of  the  Clearwater,  have  now  extended  their 
areas  to  many  hundreds  of  square  miles.  The  settlement  in 
the  southeastern  corner  of  the  Territory  is  almost  purely  of 
Mormons,  and  has  not  made  a  marked  increase. 

Of  all  the  States  and  Territories  of  the  Cordilleran  region 
Colorado  has  made  the  greatest  stride  during  the  decade. 
From  a  narrow  strip  of  settlement,  extending  along  the  im¬ 
mediate  base  of  the  Rocky  Mountains,  the  belt  has  increased 
so  that  it  comprises  the  whole  mountain  region,  besides  a 
great  extension  outward  upon  the  plains.  This  increase  is 
the  result  of  the  discovery  of  very  extensive  and  very  rich 


398 


ECONOMIC  HISTORY. 


mineral  deposits  about  Leadville,  producing  a  “  stampede  ” 
second  only  to  that  of  ’49  and  ’50  to  California.  Miners 
have  spread  over  the  whole  mountain  region  till  every  range 
and  ridge  swarms  with  them.  New  Mexico  shows  but  little 
change,  although  the  recent  extension  of  railroads  in  the 
Territory  and  the  opening  up  of  mineral  resources  will,  no 
doubt,  in  the  near  future,  add  largely  to  its  population. 
Arizona,  too,  although  its  extent  of  settlement  has  increased 
somewhat,  is  but  just  commencing  to  enjoy  a  period  of  rapid 
development,  owing  to  the  extension  of  railroads  and  to  the 
suppression  of  hostile  Indians.  Utah  presents  us  with  a 
case  dissimilar  to  any  other  of  the  Territories,  a  case  of 
steady,  regular  growth,  due  almost  entirely  to  its  agricul¬ 
tural  capabilities,  as  was  noted  above.  This  is  due  to  the 
policy  of  the  Mormon  Church,  which  has  steadily  discounte¬ 
nanced  mining  and  speculation  in  all  forms,  and  has  encour¬ 
aged  in  every  way  agricultural  pursuits.  Nevada  shows  a 
slight  extension  of  settlement,  due  mainly  to  the  gradual 
increase  in  the  agricultural  interest.  The  mining  industry 
is  probably  not  more  flourishing  at  present  in  this  State  than 
it  was  ten  years  ago,  and  the  population  dependent  upon  it 
is,  if  anything,  less  in  number.  In  California,  as  the  atten¬ 
tion  of  the  people  has  become  devoted  more  and  more  to 
agricultural  pursuits,  at  the  expense  of  the  mining  and  cattle 
industries,  we  note  a  tendency  to  a  more  even  distribution 
of  the  inhabitants.  The  population  in  some  of  the  mining 
regions  has  decreased,  while  over  the  area  of  the  great  val¬ 
ley,  and  in  the  fertile  valleys  of  the  Coast  ranges,  it  has 
increased.  In  Oregon  the  increase  has  been  mainly  in  the 
section  east  of  the  Cascade  range,  a  region  drained  by  the 
Des  Chutes  and  the  John  Day  rivers,  and  by  the  smaller 
tributaries  of  the  Snake,  —  a  region  which,  with  the  corres¬ 
ponding  section  in  Washington  Territory,  is  now  coming  to 
the  front  as  a  wheat-producing  district.  In  most  of  the  set¬ 
tled  portions  here  spoken  of  irrigation  is  not  necessary  for 
the  cultivation  of  crops,  and  consequently  the  possibilities  of 
the  region  in  the  direction  of  agricultural  development  are 
very  great.  In  Washington  Territory,  which  in  1870  had 


INCREASE  OF  POPULATION 


399 


been  scarcely  touched  by  immigration,  we  find  the  valley  west  of 
the  Cascade  Mountains  tolerably  well  settled  throughout,  while 
the  stream  of  settlement  has  poured  up  the  Columbia  into  the 
valleys  of  the  Walla  Walla  and  the  Snake  rivers  and  the  great 
plain  of  the  Columbia,  induced  thither  by  the  facilities  for 
raising  cattle  and  by  the  great  profits  of  wheat  cultivation. 

The  length  of  the  frontier  line  in  1880  is  3,337  miles.  The 
area  included  between  the  frontier  line,  the  Atlantic  and  the 
Gulf  coast,  and  the  northern  boundary  is  1,398,945  square 
miles,  lying  between  26°  and  49°  north  latitude  and  67°  and  102° 
west  longitude.  From  this  must  be  deducted,  for  unsettled 
areas,  89,400  square  miles,  leaving  1,309,545  square  miles. 

To  this  must  be  added  the  isolated  areas  of  settlement  in 
the  Cordilleran  region  and  the  extent  of  settlement  on  the 
Pacific  coast,  which  amount  in  the  aggregate  to  260,025 
square  miles,  making  a  total  settled  area  of  1,  569,570  square 
miles.  The  population  is  50,155,783,  and  the  average  den¬ 
sity  of  settlement  32  to  the  square  mile. 

[1890. 

“The  population  of  the  United  States,  exclusive  of  all 
persons  in  Indian  Territory  and  Alaska,  and  Indians  on  reser¬ 
vations,  according  to  the  Eleventh  Census  was  62,622,250 ; 
including  these  persons  the  entire  population  of  the  country 
was  62,979,766.  In  1880  the  population  for  the  states  and 
recognized  territories  was  50,155,783.  The  absolute  increase 
of  the  population  in  the  ten  years  intervening  was  12,466,467 
and  the  percentage  of  increase  was  24.86. 

1900. 

The  population  of  the  United  States,  including  that  of 
Alaska,  Hawaii,  Indian  Territory,  and  Indian  reservations, 
according  to  the  Twelfth  Census  was  76,303,387.  The  total 
population  in  1890,  with  which  the  aggregate  population  of 
this  census  should  be  compared, was  63,069,756,  as  Hawaii  with 
a  population  of  89,990  in  1890  was  annexed  August  12, 1898. 
The  increase  of  the  population  during  the  decade  between 
1890  and  1900  was  therefore  13,233,631,  or  21  per  cent.”] 


400 


ECONOMIC  HISTORY . 


THE  FACTORY  SYSTEM. 

From  Wright’s  Report  on  the  Factory  System  of  the  United 
States,  Tenth  Census,  Vol.  II.  pp.  537-541. 

At  the  time  of  the  agitation  of  their  independence  the 
desire  to  plant  the  mechanic  arts  in  this  country  became 
almost  a  passion,  —  certainly  a  feature  of  the  patriotism  of 
the  day.  Hon.  Edward  Everett,  in  an  address  on  American 
manufactures,  in  New  York,  in  1831,  stated:  — 

“The  first  measures  of  the  patriots  aimed  to  establish  their  in¬ 
dependence  on  the  basis  of  the  productive  industry  and  laborious 
arts  of  the  country.  They  began  with  a  non-importation  agree¬ 
ment  nearly  two  years  before  the  Declaration  of  Independence. 
That  agreement,  .  .  .  with  the  exception  of  the  Address  to  the 
People  of  America  and  Great  Britain,  was  the  only  positive  act  of 

the  first  Congress. 

« 

In  this  country,  as  well  as  in  England,  the  germ  of  the 
textile  factory  existed  in  the  fulling  and  carding  mills ;  the 
former,  dating  earlier,  being  the  mills  for  finishing  the  coarse 
cloths  woven  by  hand  in  the  homes  of  our  ancestors ;  in  the 
latter,  the  carding-mill,  the  wool  was  prepared  for  the  hand- 
wheel.  At  the  close  of  the  Revolution  the  domestic  system 
of  manufactures  prevailed  throughout  the  States. 

The  first  attempts  to  secure  the  spinning  machinery  which 
had  come  into  use  in  England  were  made  in  Philadelphia 
early  in  the  year  1775,  when  probably  the  first  spinning- 
jenny  ever  seen  in  America  was  exhibited  in  that  city.  Dur¬ 
ing  the  war  the  manufacturers  of  Philadelphia  extended  their 
enterprises,  and  even  built  and  run  mills  which  writers  often 
call  factories,  but  they  can  hardly  be  classed  under  that  term. 
Similar  efforts,  all  preliminary  to  the  establishment  of  the 
factory  system,  were  made  in  Worcester,  Massachusetts,  in 
1780.  In  1781  the  British  Parliament,  determined  that  the 
textile  machinery  by  which  the  manufactures  of  England  were 


THE  FACTORY  SYSTEM. 


401 


being  rapidly  extended,  and  which  the  continental  producers 
were  anxious  to  secure,  should  not  be  used  by  the  people  of 
America,  re-enacted  and  enlarged  the  scope  of  the  statute  of 
1774  against  its  exportation.  By  21  George  III.,  c.  37,  it 
was  provided  that  any  person  who  packed  or  put  on  board, 
or  caused  to  be  brought  to  any  place  in  order  to  be  put  on 
any  vessel  for  exportation,  any  machine,  engine,  tool,  press, 
paper,  utensil,  or  implement,  or  any  part  thereof,  which  now 
is  or  hereafter  may  be  used  in  the  woollen,  cotton,  linen,  or 
silk  manufacture  of  the  kingdom,  or  goods  wherein  wool, 
cotton,  linen,  or  silk  are  used,  or  any  model  or  plan  of  such 
machinery,  tool,  engine,  press,  utensil,  or  implement,  should 
forfeit  every  such  machine,  etc.,  and  all  goods  packed  there¬ 
with,'  and  £200,  and  suffer  imprisonment  for  one  year.  In 
1782  a  law  was  enacted  which  prohibited,  under  penalty  of 
£500,  the  exportation  or  the  attempt  to  export  a  blocks, 
plates,  engines,  tools,  or  utensils  used  in  or  which  are  proper 
for  the  preparing  or  finishing  of  the  calico,  cotton,  muslin,  or 
linen  printing  manufactures,  or  any  part  thereof.”  The 
same  act  prohibited  the  transportation  of  tools  employed  in 
the  iron  and  steel  manufactures.  Acts  were  also  passed  in¬ 
terdicting  the  emigration  of  artificers.  All  these  laws  were 
enforced  with  great  vigilance,  and  were  of  course  serious 
obstacles  to  the  institution  of  the  new  system  of  manufacture 
in  America. 

The  manufacturers  of  this  country  were  thus  compelled 
either  to  smuggle  or  to  invent  their  machinery.  Both 
methods  were  practised  until  most  of  the  secrets  of  the 
manufacture  of  common  goods  were  made  available  here. 

The  planting  of  the  mechanic  arts  in  this  country  became 
a  necessity  during  the  War  of  the  Revolution,  and  after¬ 
wards  the  spirit  of  American  enterprise  demanded  that  New 
England  and  the  Middle  States  should  utilize  the  water- 
powers  which  they  possessed,  and  by  such  utilization  supply 
the  people  with  home  manufactures. 

When  the  people  of  the  States  saw  that  the  Treaty  of 
Paris  had  not  brought  industrial  independence,  a  new  form 
of  expression  of  patriotism  took  the  place  of  military  service ; 

26 


402 


ECONOMIC  HISTORY. 


and  associations  were  formed,  the  object  of  which  was  to 
discourage  the  use  of  British  goods ;  and  as  the  Articles  of 
Confederation  did  not  provide  for  the  regulation  of  com¬ 
merce,  the  Legislatures  of  the  States  were  besought  to  pro¬ 
tect  home  manufactures.  The  Constitution  of  1789  remedied 
the  defects  of  the  articles  in  this  respect,  and  gave  Congress 
the  power  to  legislate  on  commercial  affairs.  The  Consti¬ 
tution  was  really  the  outcome  of  the  industrial  necessities  of 
the  people,  because  it  was  on  account  of  the  difficulties  and 
the  irritations  growing  out  of  the  various  commercial  regula¬ 
tions  of  the  individual  States  that  a  convention  of  commis¬ 
sioners  from  the  various  States  was  held  in  Annapolis  in  Sep¬ 
tember,  1786,  which  convention  recommended  the  one  that 
framed  the  new  or  present  Constitution  of  the  United  States. 

Of  course  those  industries  whose  products  were  called  for 
by  the  necessities  of  the  war  were  greatly  stimulated,  but  with 
peace  came  reaction  and  the  flooding  of  our  markets  with 
foreign  goods. 

The  second  act  under  the  Constitution  was  passed  July  4, 
1789,  with  this  preamble:  — 

“  Whereas  it  is  necessary  for  the  support  of  the  government,  for 
the  discharge  of  the  debts  of  the  United  States,  and  for  the  encour¬ 
agement  and  the  protection  of  manufactures,  that  duties  be  laid  on 
goods,  wares,  and  merchandise  imported; 

“Be  it  enacted ,  etc.” 

Patriotism  and  statute  law  thus  paved  the  way  for  the 
importation  of  the  factory  system  of  industry,  and  so  its 
institution  here,  as  well  as  in  England,  was  the  result  of 
both  moral  and  economical  forces. 

As  early  as  1786,  before  the  adoption  of  the  Constitution 
of  the  United  States,  the  Legislature  of  Massachusetts 
offered  encouragement  for  the  introduction  of  machinery  for 
carding  and  spinning  by  granting  to  Robert  and  Alex¬ 
ander  Barr  the  sum  of  £200  to  enable  them  to  complete  a 
roping-macliine,  and  also  to  “  construct  such  other  machines 
as  are  necessary  for  the  purpose  of  carding,  roping,  and 
spinning  of  sheep’s  wool,  as  well  as  of  cotton  wool.  ”  The 


THE  FACTORY  SYSTEM. 


403 


next  year  these  parties  were  granted  six  tickets  in  a  land- 
lottery,  —  others  engaged  in  the  invention  and  construction 
of  cotton-spinning  machines  at  Bridgewater,  being  associ¬ 
ated  with  the  Barrs,  who  came  to  Massachusetts  from  Scot¬ 
land  at  the  invitation  of  Hon.  Hugh  Orr,  of  Bridgewater, 
and  for  the  purpose  of  constructing  spinning-machines. 
There  is  no  doubt  that  the  machinery  built  by  them  was  the 
first  in  this  country  which  included  the  Arkwright  devices ; 
the  first  factory,  however,  in  America  expressly  for  the 
manufacture  of  cotton  goods  was  erected  at  Beverly,  Massa¬ 
chusetts,  in  1787.  This  enterprise  was  aided  by  the  Legis¬ 
lature.  The  factory  at  Beverly  was  built  of  brick,  was 
driven  by  horse-power,  and  was  continued  in  operation  for 
several  years,  but  its  career  as  a  cotton-mill  was  brief,  and 
no  great  success  attended  it.  About  the  same  time  other 
attempts  had  been  made  in  Rhode  Island,  New  York,  and 
Pennsylvania,  but  principally  in  Rhode  Island  and  that  part 
of  Massachusetts  contiguous  to  Rhode  Island. 

The  honor  of  the  introduction  of  power-spinning  machines 
in  this  country,  and  of  their  early  use  here,  is  shared  by 
these  last-named  States;  for  while  Massachusetts  claims  to 
have  made  the  first  experiments  in  embodying  the  principles 
of  Arkwright’s  inventions  and  the  first  cotton  factory  in 
America,  Rhode  Island  claims  the  first  factory  in  which 
perfected  machinery,  made  after  the  English  models,  was 
practically  employed.  This  was  the  factory  built  by  Samuel 
Slater,  in  1790,  in  Pawtucket,  Rhode  Island,  which  still 
stands  in  the  rear  of  Mill  Street  in  that  city,  and  the  hum 
of  cotton  machinery  can  still  be  heard  within  its  walls. 
Previous  to  1790  the  common  jenny  and  stock-card  had  been 
in  operation  upon  a  small  scale  in  various  parts  of  the 
United  States,  but  principally  in  Pennsylvania,  New  York, 
Rhode  Island,  and  Massachusetts ;  but  every  endeavor  to  in¬ 
troduce  the  system  of  spinning  known  as  water-frame  spin¬ 
ning,  or  Arkwright’s  method,  had  failed.  The  introduction 
of  this  system  was  the  work  of  Slater,  whom  President 
J ackson  designated  “  the  father  of  American  manufactures.  ” 
Samuel  Slater  was  born  in  Belper,  Derbyshire,  England, 


404 


ECONOMIC  HISTORY. 


June  9,  1768,  and  at  fourteen  years  of  age  was  bound  as  an 
apprentice  to  Jedediah  Strutt,  Esq.,  a  manufacturer  of 
cotton  machinery  at  Milford,  near  Belper.  Strutt  was  for 
several  years  a  partner  of  Sir  Richard  Arkwright  in  the 
cotton-spinning  business ;  so  young  Slater  had  every  oppor¬ 
tunity  to  master  the  details  of  the  construction  of  the  cotton 
machinery  then  in  use  in  England ;  for  during  the  last  four 
or  five  years  of  his  apprenticeship  he  served  as  general  over¬ 
seer,  not  only  in  making  machinery,  but  in  the  manufactur¬ 
ing  department  of  Strutt’s  factory.  Near  the  close  of  his 
term  his  attention  was  drawn  to  the  wants  of  the  States  by 
accidentally  seeing  a  notice  in  an  American  paper  of  the 
efforts  various  States  were  making  by  way  of  offering 
bounties  to  parties  for  the  production  of  cotton  machinery. 
Slater  knew  well  that  under  the  laws  of  England  he  could 
carry  neither  machines  nor  models  or  plans  of  machines  out 
of  the  country ;  so,  after  completing  his  full  time  with  Mr. 
Strutt,  he  continued  some  time  longer  with  him,  superin¬ 
tending  some  new  works  Mr.  Strutt  was  erecting.  This  he 
did  that  he  might  so  perfect  his  knowledge  of  the  business 
in  every  department  that  he  could  construct  machinery  from 
memory  without  taking  plans,  models,  or  specifications. 
With  this  knowledge  Slater  embarked  at  London,  September 
13,  1789,  for  New  York,  where  he  landed  November  17,  and 
at  -once  sought  parties  interested  in  cotton  manufactures. 
Finding  the  works  of  the  New  York  Manufacturing  Com¬ 
pany,  to  whom  he  was  introduced,  unsatisfactory,  he  corres¬ 
ponded  with  Messrs.  Brown  &  Almy,  of  Providence,  who 
owned  some  crude  spinning-machines,  some  of  which  came 
from  the  factory  at  Beverly,  Massachusetts.  In  January, 
1790,  Slater  made  arrangements  with  Brown  &  Almy  to 
construct  machinery  on  the  English  plan.  This  he  did  at 
Pawtucket,  making  the  machinery  principally  with  his  own 
hands,  and  on  the  20tli  of  December,  1790,  he  started  three 
cards,  drawing  and  roving,  together  with  seventy-two  spin¬ 
dles,  working  entirely  on  the  Arkwright  plan,  and  being  the 
first  of  the  kind  ever  operated  in  America. 

It  is  generally  supposed  that  the  course  of  the  progress  of 


THE  FACTORY  SYSTEM. 


405 


the  manufacture  of  cotton  goods  in  this  country  is  quite 
clearly  marked;  yet  a  careful  study  of  the  subject  seems 
rather  to  dissipate  the  line  of  advancement  instead  of  bring¬ 
ing  it  into  clearer  view.  Dr.  Leander  Bishop,  in  his  exceed¬ 
ingly  valuable  work,  “  A  History  of  American  Manufactures,  ” 
in  speaking  of  the  clothing  manufacture,  states  that  a  corres¬ 
pondent  of  the  “American  Museum,”  writing  from  Charles¬ 
ton,  South  Carolina,  in  July,  1T90,  refers  to  a  gentleman 
who  “had  completed  and  had  in  operation  on  the  High  Hills 
of  the  Santee  near  Statesburg,  ginning,  carding,  and  other 
machines  driven  by  water,  and  also  spinning-machines,  with 
eighty-four  spindles  each,  with  every  necessary  article  for 
manufacturing  cotton.  If  this  information  be  correct,  the 
attempt  to  manufacture  by  machinery  the  cotton  which  they 
were  then  beginning  to  cultivate  extensively  was  nearly  as 
early  as  those  of  the  Northern  States.” 

Certainly  this  bit  of  history  of  attempts  in  Southern 
States,  of  the  efforts  of  Samuel  Wetherell,  of  Philadelphia, 
of  the  Beverly  Company  in  Massachusetts,  of  Moses  Brown 
at  Providence,  R.  I.,  all  before  Slater’s  coming,  to  introduce 
spinning  by  power,  illustrates  the  difficulty  of  locating  the 
origin  of  an  institution  when  a  country  of  such  proportions 
as  our  own  constitutes  the  field.  It  is  safe,  historically,  to 
start  with  Slater  as  the  first  to  erect  cotton  machinery  on  the 
English  plan,  and  to  give  the  factory  system  1790  as  its 
birthday. 

The  progress  of  the  system  has  been  uninterrupted  from 
1790,  save  by  temporary  causes  and  for  brief  periods;  but 
these  interruptions  only  gave  an  increased  impetus  to  its 
growth.  In  1792,  by  the  invention  of  the  cotton-gin,  an 
American,  Eli  Whitney,  of  Massachusetts,  residing  tempo¬ 
rarily  in  Georgia,  contributed  as  much  toward  the  growth  of 
the  factory  system  as  England  had  contributed  by  the  splen¬ 
did  series  of  inventions  which  made  the  cotton-manufacturing 
machinery  of  the  system. 

The  alarm  of  the  people  at  the  increase  in  the  demand  for 
foreign  goods  took  shape  again  in  1794  and  the  decade  fol¬ 
lowing,  and  by  patriotic  appeals  to  all  classes,  societies  and 
clubs  were  formed  pledged  to  wear  only  home-made  goods. 


406 


ECONOMIC  HISTORY. 


Congress  was  called  upon  to  restrict  importations.  The  re- 

« 

suit  of  all  these  efforts  and  influences  stimulated  the  manu¬ 
facture  of  cotton  and  other  textiles.  The  water  privileges  of 
New  England  and  the  Middle  States  offered  to  enterprising 
men  the  inducement  to  build  factories  for  the  spinning  of 
yarn  for  the  household  manufacture  of  cloth.  At  the  close 
of  1809,  according  to  a  report  made  by  Mr.  Albert  Gallatin, 
Secretary  of  the  Treasury  in  1810,  eighty-seven  cotton  fac¬ 
tories  had  been  erected  in  the  United  States,  which,  when  in 
operation,  would  employ  80,000  spindles. 

The  perfect  factory,  the  scientific  arrangement  of  parts  for 
the  successive  processes  necessary  for  the  manipulation  of  the 
raw  material  till  it  came  out  finished  goods,  had  not  yet 
been  constructed.  As  I  have  said,  the  power-loom  did  not 
come  into  use  in  England  till  about  1806,  while  in  this  coun¬ 
try  it  was  not  used  at  all  till  after  the  war  of  1812.  In  Eng¬ 
land  even  it  had  not  been  used  in  the  same  factory  with  the 
spinning-machines.  In  fact,  for  many  years  the  custom  of 
spinning  the  yarn  under  one  management  and  weaving  the 
cloth  under  another  has  prevailed  in  England. 

In  1811  Mr.  Francis  C.  Lowell,  of  Boston,  visited  England 
and  spent  much  time  in  inspecting  cotton  factories,  for  the 
purpose  of  obtaining  all  possible  information  relative  to  cot¬ 
ton  manufacture,  with  a  view  to  the  introduction  of  improved 
machinery  in  the  United  States.  The  power-loom  was  being- 
introduced  in  Great  Britain  at  this  time,  but  its  construction 
was  kept  very  secret,  and  public  opinion  was  not  very  favor¬ 
able  to  its  success.  Mr.  Lowell  learned  all  he  could  regard¬ 
ing  the  new  machine,  and  determined  to  perfect  it  himself. 
He  returned  to  the  States  in  1814,  and  at  once  began  his 
experiments  on  Broad  Street,  Boston.  His  first  move  was 
to  secure  the  skill  of  Paul  Moody,  of  Amesbury,  Mass.,  a 
well-known  mechanic.  By  and  through  the  encouragement 
of  Mr.  Nathan  Appleton,  a  company  had  been  organized  by 
Mr.  Lowell  and  Mr.  Patrick  T.  Jackson,  with  Mr.  Appleton 
as  one  of  its  directors,  for  the  establishment  of  a  cotton 
manufactory,  to  be  located  in  Waltham,  Mass.,  on  a  water 
privilege  they  had  purchased.  This  factory  was  completed 
in  the  autumn  of  1814,  and  in  it  was  placed  the  loom  per- 


THE  FACTORY  SYSTEM. 


407 


fected  by  Mr.  Lowell,  which  differed  much  from  the  English 
looms.  Mr.  Lowell  had  neither  plans  nor  models  for  his 
factory  and  looms,  but  in  the  year  named  the  company  set 
up  a  full  set  of  machinery  for  weaving  and  spinning,  there 
being  1,700  spindles;  and  this  factory  at  Waltham  was  the 
first  in  the  world,  so  far  as  record  shows,  in  which  all  the 
processes  involved  in  the  manufacture  of  goods,  from  the  raw 
material  to  the  finished  product,  were  carried  on  in  one 
establishment  by  successive  steps,  mathematically  consid¬ 
ered,  under  one  harmonious  system.  Mr.  Francis  C.  Lowell, 
aided  by  Mr.  Jackson,  is  unquestionably  entitled  to  the 
credit  of  arranging  this  admirable  system ;  and  it  is  remarka¬ 
ble  how  few  changes  have  been  made  in  the  arrangements 
established  by  him  in  this  factory  at  Waltham. 

So  America  furnished  the  stone  which  completed  the  in¬ 
dustrial  arch  of  the  factory  system  of  manufactures. 

The  growth  of  the  factory  system  [is  well]  illustrated  by 
the  cotton  manufacture.  After  the  success  of  the  power- 
loom,  the  cotton  manufacture  took  rapid  strides,  both  in 
Europe  and  America.  The  hand-loom  and  the  hand-weaver 
were  rapidly  displaced.  Factories  sprung  up  on  all  the 
streams  of  Yorkshire  and  Lancashire,  in  England,  while  in 
this  country  the  activity  of  the  promoters  of  the  industry 
won  them  wealth,  and  won  cities  from  barren  pastures. 
They  erected  Lowell,  Lawrence,  Holyoke,  Fall  River,  and 
many  other  thriving  cities  and  towns,  and  now  in  this  gener¬ 
ation  the  industry  is  taking  root  upon  the  banks  of  Southern 
streams.  The  progressive  steps  of  this  great  trade  are  shown 
by  the  tables  which  follow.  The  facts  for  Great  Britain  for 
the  year  1833  are  taken  from  Baines’  “History  of  Cotton 
Manufacture,  ”  and  have  been  corroborated  as  far  as  possible 
from  other  sources;  they  constitute  the  most  reliable  data 
obtainable  for  that  period.  For  1831,  for  the  United  States, 
we  have  the  census  returns  and  other  sources,  none  of  them 
very  accurate,  yet  they  give  the  best  approximate  figures. 

It  will  be  observed  that  the  number  of  cotton  factories  in 
this  country  was  801  in  1831,  1,240  in  1840,  1,074  in  1850, 
and  that  since  1850  there  has  been  a  constant  decrease  in 
the  number  of  establishments.  This  is  the  result  of  consoli- 


408 


ECONOMIC  HISTORY. 


elation  and  the  establishment  of  large  works,  the  smaller 
factories  being  closed  or  united  with  the  large  ones.1  While 
the  number  of  factories  has  decreased,  the  consumption  of 
cotton  and  the  production  of  goods  has  steadily  increased. 
Perhaps  the  best  gauge  for  the  progress  of  the  industry  is  to 
be  found  in  the  quantity  of  cotton  consumed  per  capita  of 
the  population.  In  Great  Britain,  in  1881,  the  home  con¬ 
sumption  of  cotton  per  capita  (excluding  the  proportion  for 
the  export  trade)  was  6.62  pounds;  in  1881  it  was  T.75 
pounds;  in  the  United  States,  for  1880,  it  was  5.9  pounds; 
in  1880  it  was  18.91  pounds.  That  is,  the  clothing  of  the 
people  of  this  country  in  1830  required  5.9  pounds  of  cotton 
per  annum  and  now  it  requires  13.91  pounds. 

If  we  take  the  per  capita  consumption  of  the  factories, 
including  -exports  and  home  consumption,  the  proportion  for 
Great  Britain  in  1831  was  16.15  pounds;  in  1881,  40.8 
pounds;  for  the  United  States,  in  1831,  it  was,  on  this  basis, 
6.1  pounds;  in  1880  it  had  risen  to  14.96  pounds.  The 
ratios  given  as  to  spindles  to  persons  employed,  capital  to 
spindles,  product  to  spindles,  capital  to  product,  product  to 
persons  employed,  while  in  some  sense  fallacious,  and  more 
valuable  to  the  expert  than  to  the  general  reader,  yet  are 
true  for  the  time  given  and  the  existing  circumstances,  and 
certainly  show  the  change  of  circumstances.  The  ratio  of 
consumption  to  spindles  is  of  course  influenced  largely  by  the 
number  of  the  yarn  produced,  and  many  of  the  British  mills 
spin  finer  numbers  than  do  the  mills  of  this  country ;  but 
whatever  may  be  the  cause,  the  ratio  stands  as  given,  and 
shows  that  the  attendant  circumstances,  either  of  machinery 
or  kind  of  product,  or  of  some  other  matter,  vary  as  to  the 
two  countries. 

1  The  number  of  cotton  factories  for  1880  should  be  increased  by  the  num¬ 
ber  of  mills  engaged  in  working  raw  cotton,  waste,  or  cotton  yarn  into  hosiery, 
webbing,  tapes,  fancy  fabrics,  or  mixed  goods,  or  other  fabrics  which  are  not 
sold  as  specific  manufactures  of  cotton  or  of  wool ;  some  of  these  work  both 
fibres,  but  belong  more  in  the  class  of  cotton  manufactures  than  in  any  other. 
These  establishments,  249  in  all,  in  1880,  have  without  doubt  been  included  in 
the  list  of  cotton-mills  heretofore ;  so  that  now  the  total  number,  to  correspond 
with  the  past,  should  be  1,005  cotton  factories  in  the  United  States  in  1880. 


TIIE  FOLLOWING  TABLE  SHOWS  TIIE  CONDITION  OF  THE  COTTON  MANUFACTURES  OF  GREAT  BRITAIN  AND  THE  UNITED  STATES  IN  THE 

YEARS  NAMED:  — 


THE  FACTORY  SYSTEM. 


409 


—I 

8 

8 

CO 

rH 

rH 

OO 

°  d 

O 

CO 

rS  O 

i 

I 

CO 

8 

t— 

iO 

of 

oo 

3  o 

<M 

oT 

cT 

O  w 

o 

CO 

CO 

kO 

ft 

Q 

<M 

b- 

Value  of 
Product. 

1C  CO  o 

CO  CO  .  rH 

CO^  rH 

co  c o'  .o' 

O  rH  O 

cq^  <3 

CO  ^  *  of 

to  b-  O 

rH  ^  •  rH 

Number  of 
Employes, 
Including 
Children. 

237,000 

482,903 

57,466 

172,544 

Number  of 
Looms. 

100,000 

514,911 

33,433 

225,759 

Number  of 
Spinning 
Spindles. 

9,333,000 

39,527,920 

1,246,703 

10,653,435 

Capital 

Invested. 

$170,000,000 

374,720,500 

40,612,984 

208,280,346 

Number  of 
Establishments. 

1,151 

2,671 

801 

756 

3 

CO  oo 

rH 

O 

00  00 

S§ 

rH  rH 

rH 

•d 

CO 

1 

iS 

•3 

•p 

« 

2 

’3 

O 

ft 

oo 


ft 

W 

EH 

ft 

53 

H 


Average 

Consumption 

of  Cotton 

(exclusive  of 

exports) 

per  Capita  of 

Total 

Population. 

Pounds. 

6-62 

7-75 

5-90 

13  91 

Total  Average 

Consumption 

of  Cotton 

per  Year 

per  Capita  of 

Total 

Population. 

Pounds. 

1615 

40-80 

6-10 

14  96 

Total  Annual 
Consumption 

of  Cotton. 

Pounds. 

262,700,000 

1,439,393,000 

77,457,316 

750,343,981 

Years. 

1831 

1881 

1830 

1880 

Ratio  of 
Product  to 
Persons 
Employed. 

$661.15  to  1 

983.46  to  1 

1,113.28  to  1 

Ratio  of 
Capital  to 
Product. 

$1.00  to  $0.92 

1.00  to  1.27 

1.00  to  0.92 

Ratio  of 
Product  to 
Spindles. 

$16.79  to  1 

12.01  to  1 

•  •  •  • 

18.03  to  1 

Ratio  of 
Capital  to 
Spindles. 

$18.21  to  1 

9.48  to  1 

32.58  to  1 

19.55  to  1 

Ratio  of 
Spindles  to 
Persons 
Employed. 

39  to  1 

82  to  1 

22  to  1 

62  to  1 

| 

£ 

•3 

§ 

•  •  •  • 

•  •  •  • 

•  •  •  ♦ 

CO  OO  rH  O 

CO  l"-  CO  co 

OO  CO  OO  GO 

rH  rH  rH  rH 

8 

4B 

9 

o 

Great  Britain  ! 

1 

1 

United  States  • 

1 

410 


ECONOMIC  HISTORY. 


THE  COTTON  MANUFACTURES. 

From  Atkinson’s  Report  on  the  Cotton  Manufactures,  Tenth 

Census,  Vol.  II.  pp.  946-955. 

The  cotton  manufacture  of  the  United  States  may  be  now 
considered  more  firmly  established  than  ever  before.  The 
method  on  which  the  business  is  conducted  in  the  United 
States  varies  greatly  from  that  of  any  other  country;  and 
this  difference  arises  mainly  from  a  difference  not  only  in 
the  habits  and  customs  of  the  people,  but  also  in  their  con¬ 
dition  and  intelligence. 

The  home  market  is  the  most  important  one,  and  may  long 
continue  to  be  so,  although  the  export  demand  for  our  fabrics 
now  takes  from  7  to  8  per  cent  of  our  annual  product,  and  is 
likely  to  increase. 

In  contrast  with  the  cotton  manufacturer  of  Great  Britain, 
our  principal  rival,  we  are  therefore  called  upon  to  meet  the 
demands  of  an  intelligent  class  of  customers,  living  under 
substantially  uniform  conditions,  and  varying  but  little  in 
their  requirements.  Hence  we  are  not  called  upon  for  the 
great  variety  of  fabrics  that  must  be  supplied  by  Great 
Britain.  In  consequence  of  this  demand  for  a  great  variety 
of  fabrics  the  work  of  the  cotton  manufacturer  of  England  is 
much  more  divided  than  with  us.  With  the  exception  of  a 
few  large  establishments,  working  mainly  to  supply  the  home 
market,  few  goods  are  known  in  England  by  the  name  of  the 
factory  in  which  they  are  made,  nor  are  they  sold  under  the 
naim  of  the  manufacturer;  but  to  a  very  large  extent  the 
yarn  is  spun  in  one  establishment,  woven  in  another,  and  # 
finished  in  a  third.  The  gray  cloth  is  sold  to  the  ware¬ 
houseman,  or  to  the  merchant,  to  be  stamped  and  packed  by 
him,  or  to  be  dyed,  bleached,  or  printed  under  his  direction. 
If  English  goods  had  been  sold  under  the  name  and  stamp  of 
the  manufacturer,  as  cotton  goods  are  in  the  United  States, 


THE  COTTON  MANUFACTURES . 


411 


perhaps  the  substitution  of  clay  for  cotton  might  not  have 
been  carried  to  so  great  an  extent.  In  the  United  States 
cotton  goods  are  spun  and  woven  in  the  same  factory,  and 
whether  sold  'in  the  gray  or  bleached,  they  are  almost  all 
stamped  and  marketed  under  the  name  of  the  factory  in 
which  they  are  made.  Each  factory,  therefore,  has  its  repu¬ 
tation  to  sustain,  and  whether  the  fabric  be  coarse  or  fine 
it  is  the  effort  of  every  one  to  make  it  good  of  its  kind. 

The  same  rule  applies  to  printed  calicoes.  These  are 
marketed  under  the  name  of  the  works  in  which  they  have 
been  printed,  and  the  reputation  and  permanent  existence  of 
these  works  rest  upon  uniformity  in  quality,  excellence  in 
color  and  style,  and  constant  progress  in  the  art  of  design. 

We  may  not  claim  to  be  more  honest  than  our  rivals, 
but  it  is  a  great  error  to  suppose  that  it  is  permanently  profit¬ 
able  to  make  an  article  that  is  not  what  it  purports  to  be. 
A  cotton  fabric  may  be  of  a  low  grade,  and  may  be  intended 
to  sell  at  a  low  price,  but  yet  it  is  not  profitable  to  substitute 
clay  for  cotton ;  the  fabric,  whatever  it  is,  has  its  name  and 
reputation,  and  must  be  true  to  them,  or  else  the  demand  for 
it  will  sooner  or  later  cease.  Even  goods  that  are  made  for 
linings,  and  that  need  to  be  starched  and  stiffened  in  order 
to  be  used,  must  have  a  uniform  quality  in  the  fabric  itself 
to  hold  a  permanent  place  in  our  market.  Dyed  goods  that 
require  to  be  woven  on  heavily-sized  warps  cannot,  except  by 
rule,  be  loaded  with  sizing.  If  an  attempt  is  made  to  intro¬ 
duce  an  article  in  which  clay  has  been  added  to  make  it 
heavier,  it  is  immediately  detected,  because  the  use  of 
sewing-machines  is  almost  universal,  and  the  clay  in  the 
fabric  heats  the  needle  and  exposes  the  fraud. 

In  stating  those  conditions  under  which  the  manufacture 
of  cotton  is  conducted  in  the  United  States  for  the  home  de¬ 
mand,  it  is  not  intended  to  imply  that  the  use  of  a  foreign 
substance  to  give  additional  weight  to  a  cotton  fabric  is,  of 
necessity,  a  fraud.  For  instance,  there  is  a  very  large  de¬ 
mand  in  China  for  materials  for  the  grave-clothes  of  corpses, 
and  for  this  use  “  earth  to  earth,  and  dust  to  dust  ”  may  be 
considered  a  legitimate  rule,  even  if  the  earth  is  conveyed  in 


412 


ECONOMIC  HISTORY . 


the  fabric  which  is  nominally  made  of  cotton.  Some  of  the 
finest  cotton  fabrics  yet  made  in  the  United  States,  which 
closely  resemble  silk,  are  used  mainly  for  lining  coffins. 

The  principal  market  for  our  own  fabrics  is  found  among 
the  thrifty  working-people,  who  constitute  the  great  mass  of 
our  population. 

It  has  therefore  happened  that,  although  we  have  not  until 
recently  undertaken  the  manufacture  of  very  fine  fabrics,  the 
average  quality  of  the  fabrics  that  we  do  make  is  better 
than  that  of  any  other  nation,  with  the  possible  exception  of 
France.  It  is  for  the  wants  of  the  million  that  our  cotton 
factories  are  mainly  worked,  and  we  have  ceased  to  import 
staple  goods,  and  shall  never  be  likely  to  resume  their  im¬ 
port.  On  the  other  hand,  we  may  for  a  long  period  continue 
to  import  the  finer  goods  that  depend  mainly  on  fashion  and 
style  for  their  use,  and  that  are  purely  articles  of  luxury. 
As  has  been  stated,  the  substantial  fabrics  that  constitute 
the  main  part  of  our  cotton  manufacture,  and  that  are  used 
by  the  masses  of  the  people,  are  of  the  best  of  their  kind, 
with  the  possible  exception  of  those  made  in  France.  The 
French  peasantry  are  a  sagacious  and  truly  economical  race, 
and  will  not  buy  a  poor  fabric  if  they  can  get  a  good  one ; 
hence,  the  cotton  fabrics  for  their  use  are  of  a  very  substan¬ 
tial  kind,  and  are  much  more  free  from  adulteration  than 
those  of  any  other  country  in  Europe.  The  common  cotton 
fabrics  of  England,  Belgium,  and  Germany  could  hardly  be 
sold  in  the  United  States  at  any  price. 

The  finest  printed  calicoes  of  France  and  England  may  be 
the  best  of  their  kind ;  but  the  printed  calicoes  for  the  use 
of  the  multitude,  and  which  constitute  the  really  important 
branch  of  this  department  of  the  manufacture,  are  of  much 
better  quality  in  the  United  States  than  in  Europe,  and  arc 
also  of  finer  colors  and  of  more  varied  styles. 

In  fact,  one  of  the  chief  obstacles  that  it  has  been  neces¬ 
sary  to  overcome  in  the  introduction  of  unbleached  American 
cotton  fabrics  in  the  English  market,  and  in  other  markets 
heretofore  supplied  by  England,  has  been  their  apparently 
open  texture,  owing  to  the  absence  of  heavy  sizing.  In  the 


THE  COTTON  MANUFACTURES. 


413 


United  States  the  sizing  used  upon  the  warp,  and  which  is 
necessary  in  order  to  weave  it,  is  made  from  corn  or  potato 
starch,  free  from  any  substance  intending  to  make  it  heavier. 
In  the  gray  cloth  the  sizing,  therefore,  constitutes  only  2J 
to  5  per  cent  of  the  weight,  and  when  the  fabric  is  washed 
it  shrinks  more  in  measure  than  it  loses  in  weight ;  hence  a 
square  yard  washed  and  dried  without  stretching  will  be 
heavier  than  a  square  yard  taken  directly  from  the  loom. 

In  England,  on  the  other  hand,  even  the  pure  sizing  is 
made  from  wheat  flour,  which  is  very  glutinous;  and  the 
fabrics  thus  woven,  even  where  no  adulteration  is  intended, 
lose  from  10  to  12  per  cent  of  their  weight  on  the  first  wash¬ 
ing.  These  pure  goods  are,  however,  made  chiefly  for  the 
home  consumption  of  the  richer  classes  of  England.  The 
greater  part  of  the  English  cotton  fabrics,  exported  or  used 
by  the  working-classes,  are  loaded  with  from  10  to  40  per 
cent  of  clay  and  other  substances.  The  art  of  sizing  has 
been  highly  perfected  in  England,  and  has  been  made  the 
subject  of  very  numerous  patents;  and,  as  the  use  of  clay 
and  flour  to  the  extent  of  100  pounds  to  each  100  pounds  of 
cotton-warp  yarn  involves  great  danger  of  mildew,  many 
ingenious  chemical  applications  have  also  been  patented  to 
serve  as  antiseptics,  such  as  chloride  of  zinc,  chloride  of 
calcium,  common  salt,  white  vitriol,  etc.  These  various 
antiseptics  are  compounded  with  flour,  gypsum,  soapstone, 
china  clay,  and  other  heavy  substances  in  various  ways. 
The  English  text-books  upon  the  art  of  sizing  are  instructive 
and  suggestive,  especially  in  respect  to  the  rules  for  the  pur¬ 
chase  of  the  most  glutinous  kinds  of  flour,  and  for  the 
detection  of  adulteration  in  flour,  it  being  obvious  that  un¬ 
less  the  flour  is  pure  and  well  adapted  to  the  purpose,  it 
would  be  necessary  to  use  cotton  instead  of  clay  to  make  up 
the  weight  of  the  fabric. 

It  will,  of  course,  take  a  good  deal  of  time  to  accustom 
buyers  to  the  more  open  texture  of  cotton  fabrics  in  which 
no  clay  is  used;  but  as  time  passes  American  fabrics  are 
being  steadily  substituted  for  those  previously  used  by  for¬ 
eign  nations,  especially  in  China. 


414 


ECONOMIC  HISTORY. 


Since  the  year  1860  the  cotton  manufacture  of  the  United 
States  has  been  exposed  to  greater  vicissitudes  than  any 
other  important  branch  of  the  national  industry,  and  the 
wonder  is,  not  that  there  should  have  been  some  disasters, 
but  that  it  should  have  survived  at  all  in  the  hands  of  its 
original  owners.  In  1860  the  whole  number  of  spindles  in 
the  United  States  was  5,285,000.  From  1857  to  1860  the 
cost  of  constructing  a  spinning  and  weaving  factory  on  the 
medium  fabrics  woven  of  No.  25  yarn  was  from  $16  to  $20 
per  spindle  (the  number  designates  the  number  of  skeins  of 
840  yards  of  yarn  each  in  one  pound).  The  value  of  a  bale 
of  cotton  of  480  pounds  was  from  $40  to  $50.  Then  came 
the  combined  effects  of  war,  paper  money,  and  scarcity  of 
cotton.  At  one  period  more  than  two  thirds  of  the  cotton 
machinery  of  the  United  States  was  stopped;  the  value  of 
a  bale  of  cotton  rose  to  over  $900,  and  the  price  of  some 
kinds  of  goods  was  seven  to  eight  times  the  present  price. 
A  little  later  new  mills  were  constructed  which  cost  from 
$80  to  $40  per  spindle. 

At  the  date  of  the  census  the  number  of  spindles  operated 
in  the  specific  manufacture  of  cotton  fabrics  was  10,653,435; 
but  the  spindle  has  changed  in  its  productive  power,  and  each 
spindle  of  1880  was  much  more  effective  than  that  of  1860. 
The  value  of  the  bale  of  cotton  was  again  from  $40  to  $50 ; 
the  standard  printing-cloth,  which  reached  33  cents  a  yard 
during  the  war,  was  worth  4  cents;  the  No.  25  mill  for 
spinning  and  weaving  could  be  built  for  from  $14  to  $18 
per  spindle ;  our  export  of  cotton  fabrics  was  more  in  value 
and  much  more  in  quantity  than  in  1860,  and  the  only 
check  to  its  steady  and  profitable  increase  was  the  renewal 
of  the  home  demand.  Such  have  been  the  changes  and  fluc¬ 
tuations;  yet,  despite  them  all,  not  one  spindle  in  ten  has 
passed  from  the  ownership  of  the  person,  firm,  or  corpora¬ 
tion  in  whose  possession  it  was  in  1860,  except  in  the  regu¬ 
lar  process  of  bequest  or  voluntary  sale. 

During  the  period  of  inflation  or  of  great  vicissitude,  the 
attention  of  the  managers  of  the  property  was  of  necessity 
devoted  to  other  matters  than  the  improvements  and  minute 


THE  COTTON  MANUFACTURES. 


415 


savings  in  which  the  profit  of  the  business  now  consists ;  but 
during  the  last  few  years  very  great  improvements  have  been 
made,  and  the  lesson  of  economy  and  saving  has  been 
learned.  The  best  example  that  can  be  cited  may  be  found 
in  the  record  of  one  great  factory  working  upon  coarse  and 
substantial  fabrics,  and  consuming  more  than  20,000  bales 
of  cotton  a  year.  Sixty  per  cent  of  its  products  are  sold  for 
export  to  various  parts  of  the  world.  The  proportion  of 
operatives  to  each  1,000  spindles  has  been  decreased  43  per 
cent,  or  from  26  £  to  15.  The  wages  of  women,  who  consti¬ 
tute  more  than  two  thirds  of  the  operatives,  have  been  in¬ 
creased  33  per  cent.  The  cost  of  making  the  cloth,  aside 
from  the  material  used,  has  been  decreased  21  per  cent. 

In  1860  the  average  product  of  one  operative,  working 
one  year  was  5,317  pounds;  in  1880,  7,928  pounds  of  drill, 
such  as  is  exported  to  China.  Assuming  5  pounds,  or  about 
16  yards,  as  the  annual  requirement  of  a  Chinaman  for 
dress,  in  1860  one  Lowell  operative  working  one  year  clothed 
1,063  Chinese;  in  1880  one  could  supply  1,586.  It  will  be 
obvious  that  no  hand  spinning  and  weaving  can  compete 
with  this  product  of  machinery ;  *  yet  the  machine-made 
fabrics  of  Europe  and  America  combined  have  as  yet  reached 
only  six  or  eight  in  a  hundred  of  the  Chinese.  How  soon,  the 
rest  will  be  clothed  in  cotton  fabrics  made  by  machinery  from 
American  cotton,  therefore,  depends  but  little  on  whether 
the  wages  of  the  Lowell  factory  girl  be  $4  or  $6  per  week, 
but  rather  on  what  exchangeable  products  the  Chinese  can 
produce  better  or  cheaper  than  we  can.  The  more  tea,  silk, 
sugar,  and  other  commodities  we  buy  from  them,  the  more 
cotton  fabrics  and  other  products  in  which  we  excel  will  they 
buy  from  us. 

It  has  been  held  that  the  cotton  of  America  must  be  more 
and  more  used  both  in  America  and  elsewhere,  and  that,  as 
time  goes  on,  almost  every  other  kind,  with  the  exception  of 
the  cotton  of  Egypt,  must  give  place  to  it.  To  what  extent 
may  the  same  pre-eminence  be  secured  for  the  cotton  fabrics 
of  the  United  States  in  the  markets  of  the  world  that  we 
have  secured  in  respect  to  the  cotton  fibre  ? 


416 


ECONOMIC  HISTORY . 


In  the  consideration  of  this  branch  of  the  subject,  our 
attention  must  be  given  to  the  present  condition  of  competi¬ 
tion  between  the  mills  of  the  Middle  and  Eastern  States  with 
the  mills  of  Great  Britain. 

In  respect  to  the  Eastern  States  the  cotton  factories  of 
Lowell  in  Massachusetts,  Manchester  in  New  Hampshire,  Bid- 
deford  and  Lewiston  in  Maine,  may  be  considered  in  their  re¬ 
lation  to  the  factories  of  Manchester,  Stockport,  Preston,  and 
Bolton  in  England.  For  the  purposes  of  this  comparison  it 
may  be  assumed  that  there  can  be  no  permanent  advantage  of 
one  set  of  mills  over  the  other  in  respect  to  the  quality  and 
perfection  of  the  machinery.  At  any  given  time  some  ad¬ 
vantage  may  be  claimed  and  admitted  on  either  side  in  some 
special  department  of  the  mill ;  but  every  invention  or  im¬ 
provement  will  sooner  or  later  be  adopted  on  both  sides,  and 
the  supremacy  in  the  art  of  converting  cotton  into  cloth  must 
ultimately  fall  to  that  country  or  section  which  possesses  the 
advantage  in  respect  to  the  conditions  offered  to  the  oper¬ 
atives,  and  in  proximity  to  the  source  of  the  raw  material. 

The  best  conditions  of  life  for  the  operatives,  and  the  best 
prospects  of  improving  their  condition  and  that  of  their 
children,  are  of  the  gravest  importance.  The  factors  in  this 
problem  are  education,  shelter,  subsistence,  and  opportunity 
for  other  kinds  of  work.  In  respect  to  education,  the 
common-school  system  of  the  United  States  assures  a  thor¬ 
ough  training  free  of  cost,  and  in  the  principal  towns  and 
cities  free  education  is  carried  to  the  point  of  preparing  the 
pupil  to  enter  a  university. 

In  respect  to  subsistence,  the  factories  of  New  England 
are  3,000  miles  nearer  the  wheat-fields  and  grazing-grounds 
of  the  West  than  those  of  Lancashire;  and  so  long  as  Europe 
buys  food  of  America  our  own  mills  must  have  the  advantage 
of  proximity  to  the  Western  prairids.  In  respect  to  the 
rents  of  dwelling-houses  there  cannot  long  be  any  difference, 
if  there  is  any  at  present,  because  the  materials  for  construc¬ 
tion  are  most  abundant  in  America.  Opportunity  for  other 
work  than  that  of  the  factory  must  continue  for  many  gen¬ 
erations,  and  until  this  continent  is  peopled. 


THE  COTTON  MANUFACTURES . 


417 


In  comparing  our  power  to  compete  with  England  we  may 
claim  advantages  of  one  kind,  and  in  comparing  with  the 
nations  of  continental  Europe  we  may  claim  advantages  of 
another  kind,  in  some  respects  of  a  different  order.  In 
competition  with  England,  it  is  often  claimed  that  our  chief 
advantage  lies  in  a  certain  alleged  versatility  and  power  of 
adapting  means  to  ends,  and  in  great  quickness  of  perception 
on  the  part  of  working-people  in  respect  to  the  advantages 
to  be  gained  by  the  adoption  of  new  processes  or  inventions. 
If  we  have  this  advantage,  there  must  be  special  causes  for 
it  in  the  influences  that  are  brought  to  bear  upon  the  opera¬ 
tives  and  artisans  who  do  the  work ;  for  a  very  large  propor¬ 
tion  of  them  are  foreign-born,  or  are  the  children  of  foreign 
immigrants.  Why  should  they  work  with  any  more  zeal  or 
judgment  here  than  in  the  countries  whence  they  have  come  ? 
Why  are  Irish  and  French-Canadian  factory  hands  to  be  re¬ 
lied  on  for  more  steady  work,  larger  product,  better  disci¬ 
pline,  and  more  cleanly  and  wholesome  conditions  of  life 
than  the  operatives  of  England,  Belgium,  and  Germany  ? 
To  me  it  appears  evident  that  these  advantages,  so  far  as  they 
exist,  are  due  mainly  to  the  following  circumstances :  — 

First.  Our  system  of  common  and  purely  secular  schools, 
attended  by  the  children  of  rich  and  poor  alike. 

Second.  Manhood  suffrage. 

Third.  The  easy  acquisition  of  land. 

Fourth.  The  habit  of  saving  small  sums  induced  by  the 
establishment  of  savings-banks  throughout  the  manufacturing 
States. 

Fifth.  The  absence  of  a  standing  army,  and  the  applica¬ 
tion  of  the  revenue  derived  from  taxes  on  the  whole  to  useful 
purposes. 

In  respect  to  the  first  of  these  influences,  the  public-school 
system,  the  foreign  observer  generally  takes  notice  only  of 
the  quality  of  the  instruction  given,  and  though  he  may  find 
something  to  praise,  he  finds  also  much  to  blame.  He  finds 
in  many  cases  the  instruction  bad  and  the  subjects  often  ill- 
chosen,  and  he  wonders  at  the  misdirection  of  a  force  that 
might  be  so  much  more  wisely  applied.  What  he  fails  to 

27 


418 


ECONOMIC  HISTORY. 


notice  is  that  the  school  itself,  entirely  apart  from  its  instruc¬ 
tion,  is  the  great  educator  of  the  children  who  attend  it. 
The  school  is,  first  of  all,  no  respecter  of  persons ;  the  stupid 
son  of  a  rich  man,  led  in  every  class  by  the  son  of  a  me¬ 
chanic,  cannot  in  after-life  look  down  on  him  as  an  inferior, 
whatever  the  conventional  position  of  the  two  may  be ;  or,  if 
the  rich  man’s  son  has  brains  as  well  as  fortune,  the  poor 
man’s  son  can  never  attribute  to  fortune  only  the  lead  that 
he  may  take  in  after-life.  The  school  is  thoroughly  demo¬ 
cratic,  and  each  pupil  learns  in  it  that  it  depends  on  himself 
alone  what  place  he  may  take  in  after-life,  and  that,  al¬ 
though  society  may  be  divided  into  planes,  there  is  no 
system  of  caste  and  no  barrier  in  the  way  of  social  success 
except  the  want  of  character  and  ability  to  attain  it.  The 
associations  of  the  common  school  utterly  prevent  anything 
like  servility  in  the  relation  of  classes  in  after-life;  and 
although  it  is  sometimes  made  a  little  too  manifest  that 
“  one  man  is  as  good  as  another,  and  a  little  better,  ”  on  the 
part  of  those  who  are  more  eager  than  discreet  in  their  effort 
to  rise,  yet  on  the  whole  the  relation  of  the  various  classes, 
which  must  in  the  nature  of  things  always  and  everywhere 
exist,  is  that  of  mutual  respect,  and  anything  like  the  old- 
world  distinctions  of  caste  and  rank  would  seem  about  as 
absurd  to  one  as  to  the  other.  The  common  school  is  the 
solvent  of  race,  creed,  nationality,  and  condition. 

In  another  way  the  discipline  of  the  school  affects  the  pro¬ 
cesses  of  manufacture.  In  the  schools,  cleanliness,  order, 
and  regular  habits  are  enforced,  with  deference  to  the 
teachers  and  respect  for  authority ;  and  in  these  later  years, 
this  is  coupled  with  the  teaching  of  music  and  drawing  in 
all  the  principal  towns  and  cities.  When  children  thus 
trained  are  removed  to  the  mill  or  the  workshop,  habits  of 
order  and  cleanliness,  with  some  aesthetic  taste,  are  already 
established.  Nothing  strikes  an  American  manufacturer 
with  so  much  surprise,  as  the  extreme  untidiness  of  the 
large  textile  mills  of  England  and  the  dreariness  of  the  fac¬ 
tory  towns.  In  this  respect,  however,  it  must  be  confessed 
that  the  managers  of  the  New  England  mills  are  greatly 


THE  COTTON  MANUFACTURES. 


i. 


419 

aided  by  the  absence  of  smoke,  the  coal  commonly  used 
being  anthracite.  Much  surprise  is  often  expressed  by  our 
foreign  visitors,  at  the  amount  of  decoration  permitted  in 
the  fitting  of  stationary  and  locomotive  engines  and  in  much 
of  our  machinery ;  but,  bad  as  the  taste  displayed  may  some¬ 
times  be,  it  is  nevertheless  a  fact  that  such  engines  or 
machines  are  better  cared  for  and  kept  in  better  repair  than 
where  no  individuality,  so  to  speak,  is  permitted.  On  one 
of  our  great  railways  the  attempt  was  not  long  since  made 
to  dispatch  the  locomotives  as  they  happened  to  arrive  at  the 
central  station,  sometimes  with  one  and  sometimes  with  an¬ 
other  engine-driver;  but  the  immediate  and  great  increase 
in  the  repair  account  caused  the  corporation  to  return  very 
soon  to  the  customary  plan  of  giving  each  driver  a  particu¬ 
lar  locomotive,  with  which  he  may  be  identified. 

The  instruction  of  the  school  also  gives  every  pupil  a 
superficial  knowledge,  if  no  more,  of  the  geography  and  re¬ 
sources  of  the  country,  which  the  universal  habit  of  reading 
newspapers  keeps  up.  Hence  comes  the  almost  entire  ab¬ 
sence  of  any  fixed  character  in  the  labor  of  the  country; 
every  boy  believes  that  he  can  achieve  success  somewhere 
else,  if  not  at  home.  No  congestion  of  labor  can  last  long. 
The  war  and  the  succeeding  railway  mania  combined  con¬ 
centrated  population  at  certain  points  to  a  greater  extent 
than  ever  happened  before,  and  it  has  taken  more  than  five 
years  to  overcome  the  difficulty ;  but  within  these  five  years 
a  million  or  more  new  inhabitants  in  Texas,  half  a  million 
or  more  in  Kansas,  and  probably  two  or  three  millions 
added  to  the  population  of  Nebraska,  Colorado,  Minnesota, 
and  the  far  Northwest,  indicate  that  the  evil  has  already 
found  a  remedy. 

It  is  already  apparent  that  a  very  slight  increase  in  the 
demand  for  skilled  workmen  in  certain  branches  of  employ¬ 
ment  would  not  easily  be  met  in  the  Eastern  States  except 
by  drawing  upon  England  and  Germany.  During  the  years 
of  depression,  the  cessation  of  railway  building  and  the  use 
of  the  excess  of  railway  plant  existing  in  1873  has  caused 
the  dispersion  of  a  large  portion  of  the  trained  mechanics 


420 


ECONOMIC  HISTORY. 


and  artisans  who  then  did  the  work  of  supplying  this  de¬ 
mand  ;  but  these  are  not  the  men  who  have  crowded  the  East¬ 
ern  cities  and  caused  the  apparent  excess  of  laborers  out  of 
work.  Such  men  have  gone  back  to  the  land,  or  in  the  new 
States  and  Territories  have  found  other  ways  in  which  to 
apply  their  skill  and  energy,  and  they  will  not  return.  It 
may  be  that  the  greatest  danger  to  the  manufacturers  of 
England  will  not  be  in  our  competition  in  the  sale  of  goods 
in  neutral  markets,  but  in  our  competition  for  the  skilled 
workmen  and  artisans  who  make  these  goods,  when  we  offer 
them  equal  or  higher  wages  and  better  conditions  of  life  in 
the  work  that  will  very  soon  need  to  be  done  to  supply  the 
increasing  demand  in  our  own  country. 

The  patent  system  may  here  be  cited  also  as  a  factor  in 
our  industrial  system.  It  has  been  carried  to  an  almost  ab¬ 
surd  extreme,  so  that  it  is  not  safe  for  any  one  to  adopt  a 
new  method,  machine,  or  part  of  a  machine,  and  attempt  to 
use  it  quietly  and  without  taking  out  a  patent,  lest  some  sharp 
person,  seeing  it  in  use  and  not  published,  shall  himself 
secure  a  patent  and  come  back  to  the  real  inventor  with  a 
claim  for  royalty. 

Manhood  suffrage,  subject  as  it  is  to  great  abuses,  and 
difficult  as  it  has  made  the  problem  of  the  self-government  of 
great  cities,  where  voters  do  not  meet  each  other,  as  in  the 
town-meeting,  face  to  face,  but  where  the  powers  of  govern¬ 
ment  are  of  necessity  delegated  to  men  of  whom  the  voters 
can  have  little  personal  knowledge,  yet  works  distinctly  in 
the  direction  of  the  safety,  stability,  and  order  of  the  com¬ 
munity.  Outside  of  two  or  three  of  the  very  largest  cities, 
where  there  are  concentrated  great  masses  of  illiterate  citi¬ 
zens,,  it  would  be  difficult  to  find  a  case  of  serious  abuse  of 
the  power  of  taxation  except  in  the  South  since  the  war,  and 
even  there  the  evil  is  now  mainly  abated. 

The  easy  acquisition  of  land  throughout  the  country  under 
simple  forms  of  conveyance,  registered  in  every  county,  gives 
a  motive  to  economy,  and  induces  habits  of  saving  that  are 
of  supreme  importance  in  their  effect  on  society.  In  the 
town  in  which  I  live,  — -  and  in  which  I  can  remember  the 


THE  COTTON  MANUFACTURES. 


421 


coming  of  the  first  Irishman  who  became  a  land-owner, —  out 
of  about  one  thousand  owners  of  real  estate,  over  two  hun¬ 
dred  are  of  Irish  birth  or  extraction.  The  richest  one  among 
them  came  from  Ireland  in  1846,  a  steerage  passenger.  He 
now  pays  taxes  on  property  of  the  value  of  $50,000,  almost 
all  in  real  estate.  His  son  is  superintendent  of  the  repairs 
of  highways,  and  is  one  of  the  most  efficient  members  of  the 
school  committee. 

During  the  last  thirty  years  the  factory  population  of  New 
England  has  passed  through  three  phases.  First  came  the 
sons  and  daughters  of  the  New  England  farmer;  but  as  the 
sewing-machine  and  other  inventions  opened  new  demands 
for  women’s  work,  women  of  American  birth  passed  out  to 
easier  or  better-paid  employment,  while  the  men  took  up 
other  branches  requiring  more  individual  skill.  These 
places  were  taken  mainly  by  Irish,  with  a  few  Germans  and 
English.  But  as  the  Irish  saved  their  earnings,  and  as  the 
New  England  yeomen  emigrated  to  the  richer  lands  of  the 
great  West,  they  passed  out  of  the  mills  to  buy  up  the  de¬ 
serted  farms  of  the  poorer  Northeastern  States,  where,  by 
their  persistent  industry  and  manual  labor,  they  achieved 
success,  and  gained  a  position  which  satisfied  them,  but 
with  which  the  native  New  Englander  is  no  longer  contented. 
Their  places  in  the  mills  are  now  being  more  and  more  taken 
by  the  French  Canadians,  who,  in  their  new  conditions  and 
surroundings,  show  little  of  the  stolid  and  unprogressive 
character  which  has  kept  them  so  long  contented  on  their 
little  strips  of  land  on  the  Saint  Lawrence  River.  In  the 
very  air  they  breathe  they  seem  to  imbibe  a  new  and  restless 
energy,  while  the  intelligence  shown  by  their  children  in 
the  schools  augurs  well  for  their  future  progress.  On  the 
whole  the  simplicity  of  our  system  of  land  tenure,  and  the 
ease  with  which  small  parcels  may  be  obtained,  must  be 
rated  among  the  most  important  factors  in  considering  our 
possible  advantage  over  other  countries. 

Next  in  our  list  comes  the  savings-bank.  In  1875,  out  of 
the  1,652,000  inhabitants  of  Massachusetts,  720,000  were 
depositors  in  savings-banks  to  the  amount  of  $238,000,000. 


422 


ECONOMIC  HISTORY. 


During  the  late  years  of  depression  the  deposit  has  decreased 
somewhat  in  amount,  but  the  decrease  has  been  chiefly  owing 
to  the  withdrawal  of  money  for  other  investment,  especially 
in  United  States  bonds.  There  have  been  some  failures  of 
banks  and  some  losses,  as  might  well  have  been  expected, 
but  they  have  been  less  than  in  any  other  branch  of  business ; 
and  the  savings-bank  system  stands  firmly  based  on  well- 
earned  confidence,  and  offers  an  easy  means  of  saving  the 
smallest  sums  to  every  man,  woman,  and  child  in  the  State. 
At  the  present  time  the  deposits  in  the  savings-banks  of 
Massachusetts  amount  to  about  $240,000,000,  owned  by 
about  750,000  persons. 

To  these  causes  of  quick  adaptation  to  any  conditions  that 
may  arise,  or  to  any  necessity  for  the  application  of  new 
methods  or  devices,  may  be  added  the  custom,  which  has 
almost  the  force  of  law,  of  an  equal  distribution  of  estates 
among  the  children  of  the  testator.  Tools  to  him  who  can 
use  them  is  the  unwritten  law ;  and  neither  land  nor  capital 
can  remain  long  in  the  possession  of  him  who  cannot  direct 
or  use  them  wisely.  Liberty  to  distribute  is  esteemed  as 
important  a  factor  in  our  body-politic  as  liberty  to  accumu¬ 
late,  even  though  the  liberty  may  sometimes  lead  to  the 
apparent  waste  of  great  fortunes. 

Finally,  it  must  be  held  that  our  freedom  from  the  blood - 
tax  of  a  standing  army,  and  the  fact  that  the  proceeds  of 
taxation  are,  on  the  whole,  usefully  and  productively  ex¬ 
pended,  are  among  our  greatest  advantages;  and  this  is 
asserted  with  confidence,  notwithstanding  the  misgovern- 
ment  of  some  great  cities  and  of  several  of  the  Southern 
States.  What  are  these  failures  but  proofs  of  the  general 
confidence  of  the  people  in  local  self-government  ?  Great 
frauds  and  great  abuses  can  only  happen  where  integrity  is 
the  common  rule ;  and  where  each  man  distrusts  his  neigh¬ 
bor,  or  each  town,  city,  or  State,  distrusts  the  next,  the 
opportunity  for  fraud  or  breach  of  trust  cannot  occur.  The 
use  of  inconvertible  paper  money  during  many  years  has  not 
been  without  its  necessary  malign  result  upon  the  character 
of  the  people,  and  the  newspapers  are  filled  with  the  fraud 


THE  COTTON  MANUFACTURES . 


423 


and  corruption  that  have  come  to  light;  but  no  newspaper 
has  ever  yet  recorded  one  fact  that  offsets  many  frauds.  In 
the  great  Boston  fire,  one  of  the  Boston  banks  lost  not  only 
every  book  of  account  but  every  security  and  note  that  was 
in  its  vaults,  amounting  to  over  $1,250,000.  On  the  morn¬ 
ing  after  the  fire  its  officers  had  no  evidence  or  record  by 
which  any  of  the  persons  or  corporators  who  owed  it  money 
could  be  held  to  their  contracts;  yet  within  a  very  short 
time,  duplicate  notes  were  voluntarily  brought  in  by  its 
debtors,  many  of  whom  knew  not  whether  they  could  ever 
pay  them  because  the  fire  had  destroyed  their  own  property, 
and  the  known  ultimate  loss  of  that  bank  from  the  burning 
of  its  books  and  securities  was  less  than  $10,000. 

Our  army  is  but  a  border  police.  Although  its  officers  are 
held  in  honor  and  esteem,  military  life  is  not  a  career  that 
very  many  seek,  and  as  time  goes  on  it  will  become  an  occu¬ 
pation  less  and  less  to  be  desired.  Thus  we  are  spared  not 
only  the  tax  for  its  support,  but  the  worse  tax  of  the  with¬ 
drawal  of  its  members  from  useful  and  productive  pursuits. 
It  is  in  this  respect  that  we  claim  our  greatest  advantage 
over  the  nations  of  continental  Europe.  What  have  we  to 
fear  from  the  competition  of  Germany  if  we  really  undertake 
to  beat  her  in  the  neutral  markets,  which  we  can  reach  as 
readily  as  she  can  ?  For  a  little  while,  the  better  instruction 
of  the  merchants  in  her  technical  and  commercial  schools 
may  give  her  advantage ;  but  that  can  be  overcome  in  a  single 
generation,  or  as  soon  as  the  need  is  felt  with  us,  as  it  is 
now  beginning  to  be  felt.  After  we  shall  have  supplied  our 
present  want  of  technical  education,  the  mere  difference  be¬ 
tween  the  presence  of  a  great  army  on  her  soil  and  its  neces¬ 
sary  support,  and  the  absence  of  such  a  tax  on  us,  will 
constitute  the  difference  on  which  modern  commerce  turns. 
When  traffic  of  the  world  turns  on  half  a  cent  a  yard,  a  cent 
a  bushel,  or  a  half-penny  a  pound  on  the  great  staples,  no 
nation  can  long  succeed  in  holding  a  traffic  that  is  handi¬ 
capped  with  a  standing  army.  The  protection  of  Germany 
from  our  competition  in  neutral  markets  may  be  offset  in 
our  yet  more  dangerous  competition  for  men.  The  German 


424 


ECONOMIC  HISTORY . 


already  knows  Texas,  and  in  the  one  block  of  60,000  square 
miles  of  land  by  which  the  State  of  Texas  exceeds  the  area 
of  the  German  empire,  we  offer  room  and  healthy  conditions 
of  life  for  millions  of  immigrants ;  and  if  they  come  in  suffi¬ 
cient  numbers,  they  can  raise  on  that  single  square  of  land 
as  much  cotton  as  is  now  raised  in  the  whole  South,  that  is 
to  say,  5,000,000  bales;  and  as  much  wheat  as  is  now  raised 
in  the  whole  North,  that  is  to  say,  400,000,000  bushels,  and 
yet  subsist  themselves  beside  on  what  is  left  of  this  little 
patch  that  will  not  be  needed  for  these  two  crops. 

It  will  be  obvious  that  even  the  least  imaginative  cannot 
but  be  moved  by  the  influences  that  have  been  designated, 
and  that  versatility  and  readiness  to  adopt  every  labor-saving 
device  will  not  only  be  promoted,  but  will  be  absolutely 
forced  into  action,  wdien  such  vast  areas  are  to  be  occupied, 
and  when  even  the  dullest  boy  is  educated  in  the  belief  that 
he  also  is  to  be  one  of  those  who  are  to  build  up  this  nation 
to  the  full  measure  of  its  high  calling.  We  may  not  dare 
to  boast,  in  view  of  all  we  have  passed  through ;  but  we  know 
that  slavery  has  been  destroyed,  and  that  the  nation  lives 
stronger,  truer,  and  more  vigorous  than  ever  before.  We 
know  that  it  has  been  reserved  for  a  democratic  republic  to 
be  the  first  among  nations  that,  having  issued  government 
notes  and  made  them  a  legal  tender,  has  resumed  payment 
in  coin  without  repudiation  or  reduction  of  the  promise. 
We  know  that  we  have  paid  nearly  a  half  of  our  great  na¬ 
tional  debt  already,  and  that  the  rest  is  now  mainly  held  by 
our  own  citizens.  We  believe  that  within  the  lives  of  men 
of  middle  age  now  living,  the  nation  will  number  one  hun¬ 
dred  millions,  and  that,  in  whatever  else  we  may  be  found 
wanting,  we  cannot  long  be  kept  back  in  our  career  of  mate¬ 
rial  prosperity,  which  shall  be  shared  with  absolute  certainty 
by  every  one  who  brings  to  the  work  health,  integrity,  and 
energy. 

If  there  is  any  force  in  this  reasoning,  our  competition 
with  other  manufacturing  countries,  in  the  supplying  of  neu¬ 
tral  markets  with  manufactured  goods,  will  not  be  compassed 
by  the  low  rates  of  wages  paid  to  our  factory  operatives  or  to 


THE  COTTON  MANUFACTURES. 


425 


the  working-people  engaged  in  our  metal  works  and  other 
occupations,  but  first  by  obtaining  and  keeping  such  an  ad¬ 
vanced  position  in  the  application  and  use  of  improved  tools 
and  machinery  as  shall  make  high  wages  consistent  with  a 
low  cost  of  production ;  secondly,  by  our  ability  to  obtain  the 
raw  materials  at  low  cost.  Every  employer  knows  that 
among  employes  who  are  paid  by  the  piece,  it  is  the  opera¬ 
tive  that  gains  the  largest  earnings  whose  production  costs 
the  least,  because  under  the  control  of  such  operatives  the 
machinery  is  most  effectively  guided  during  working  hours. 
As  it  is  with  single  operatives,  so  it  is  with  large  masses ;  if 
well  instructed  and  working  under  the  incentives  to  industry 
and  frugality  that  have  been  named,  their  large  product  will 
earn  for  them  ample  wages,  and  yet  result  in  a  low  cost  of 
labor  to  the  employer.  Such  workmen  never  have  any  “  blue 
Monday.  ”  The  workman  who  in  this  country  habitually  be¬ 
comes  intoxicated  is  soon  discharged,  and  his  place  is  filled 
by  one  who  respects  himself  and  values  his  place  too  much 
to  risk  his  position  in  dissipation. 

Competition  with  England  in  supplying  the  markets  of 
Asia,  Africa,  and  South  America  with  cotton  goods,  is  now 
perhaps  the  best  criterion  by  which  to  gauge  our  ability  to 
compete  in  other  branches  of  manufacture.  It  has  been 
often  assumed  in  England  that  the  increasing  shipments  of 
cotton  goods  from  this  country  have  been  forced  by  necessity, 
and  merely  consisted  of  lots  sold  below  cost,  as  a  means  of 
obtaining  ready  money ;  but  there  is  no  ground  whatever  for 
this  general  assumption,  even  though  some  small  shipments 
may  have  been  made  at  first  with  this  view.  Our  export  of 
cotton  fabrics  amounts  as  yet  to  but  7  or  8  per  cent  of  our 
production,  and  is  but  a  trifle  compared  to  that  of  Great 
Britain;  but  it  is  not  made  at  a  loss,  and  it  constitutes  a 
most  important  element  in  the  returning  prosperity  of  our 
cotton-mills.  The  goods  exported  are  mostly  made  by  strong 
and  prosperous  corporations,  paying  regular  dividends,  and 
consist  mainly  of  coarse  sheetings  and  drills,  which  are  sold 
by  the  manufacturers  to  merchants,  who  send  them  to  China, 
Africa,  and  South  America  in  payment  for  tea,  silk,  ivory, 


426 


ECONOMIC  HISTORY. 


sugar,  gums,  hides,  and  wool.  They  are  not  made  by  oper¬ 
atives  who  earn  less  than  the  recent  or  present  rates  of  wages 
in  England,  but  in  most  departments  of  the  mills  by  those 
who  earn  equal  wages,  or  even  more.  This  competition  had 
been  fairly  begun  before  the  late  war  in  this  country,  but  it  is 
now  continued  under  better  conditions.  The  mills  of  New 
England,  owing  to  through  connections  by  rail,  are  now 
relatively  much  nearer  the  cotton-fields  than  they  were  then. 
Prior  to  1860  substantially  all  the  cotton  went  to  the  sea¬ 
ports  of  the  cotton  States,  and  from  there  the  cost  of  moving 
it  to  the  North  or  to  Liverpool  varied  but  little;  but  at  the 
present  day  a  large  and  annually  increasing  portion  of  the 
cotton  used  in  the  North  is  bought  in  the  interior  markets, 
and  is  carried  in  covered  cars  directly  to  the  mills,  where 
the  bales  are  delivered  clean,  and  much  more  free  from 
damage  and  waste  than  those  which  are  carried  down  the 
Southern  rivers  on  boats  and  barges  dumped  upon  the 
wharves,  and  then  compressed  to  the  utmost  for  shipment 
by  sea. 

In  proof  that  this  advantage  is  an  actual  one,  the  following 
example  may  be  cited :  A  contract  has  just  been  made  for  the 
transportation  of  a  large  quantity  of  cotton  from  Texas  to 
Liverpool  at  the  rate  of  $1.10  per  100  pounds,  the  proportion 
assigned  to  the  land  carriage  being  TO  cents,  to  transship¬ 
ment  in  Boston  and  to  the  steamship  40  cents ;  the  rate  of 
marine  insurance  is  three  eighths  of  1  per  cent,  and  the  cost 
of  handling  in  Liverpool  and  transportation  to  Manchester, 
not  less  than  a  quarter  of  a  cent  per  pound.  Bargains  may 
be  made  to  bring  cotton  from  the  same  point  in  Texas  to  the 
principal  factory  cities  of  New  England  at  the  rate  assigned 
to  the  land  carriage,  namely,  70  cents  per  100  pounds.  This 
cotton  is  brought  from  the  interior  towns  of  Texas  to  Boston 
and  cannot  be  carried  to  Liverpool  by  way  of  Galveston  or 
New  Orleans  so  cheaply,  else  it  would  not  come  this  way, 
Assuming  the  bale  to  weigh  500  pounds,  at  10  cents  a  pound, 
we  have  the  following  comparative  cost:  — 


) 


THE  COTTON  MANUFACTURES.  427 


LOWELL. 

Per  Bale.  Per  Cwt. 

Cost  of  cotton  in  Texas,  500  pounds,  at  10 
cents,  including  all  local  charges  .  .  .  $50  00 

Freight  to  Lowell  in  a  covered  locked  car  in 
which  the  cotton  is  protected  from  rain, 
mud,  and  other  causes  of  waste,  at  70 
cents  per  100  pounds .  3  50 

Total . $53  50  $10  70 


LANCASHIRE. 

500  pounds,  at  10  cents,  including  all  local 

charges . $50  00 

Freight  from  Texas  to  Liverpool,  at  $1.10 

per  100  pounds .  5  50 

Insurance  at  three  eighths  of  one  per  cent  on 

$56 .  21 

Transshipment  in  Liverpool,  and  freight  to 
Lancashire,  one  fourth  of  a  cent  ...  1  25 

Total . $56  96 

% 

Advantage  of  Lowell  over  Lancashire  .  .  $3  46 


11  39 


$0  69 


There  may  be  changes  in  the  rates,  but  it  does  not  seem 
probable  that  the  relation  of  the  land  to  the  ocean  rate  can 
be  much  changed,  and  it  would  therefore  appear  that  the 
New  England  manufacturer  will  have  a  permanent  advantage 
in  the  price  of  American  cotton  of  any  given  grade,  varying 
from  6  to  8  per  cent  as  the  price  of  cotton  may  vary  from 
12  to  9  cents  per  pound;  and  this  advantage  may  be  equal  to 
15  or  25  per  cent  in  ability  to  pay  wages,  as  the  cost  of  labor 
varies  from  a  quarter  to  a  third  in  the  total  cost  of  coarse 
and  medium  goods,  such  as  constitute  the  chief  part  of  the 
demand  of  the  world. 

It  may  be  said  that  this  proves  too  much,  and  that  the 
cotton  spinners  of  the  Southern  States  will  have  the  same 
relative  advantage  over  New  England.  Let  this  be  freely 
admitted.  We  are  treating  the  question  of  the  future 
supremacy  of  the  United  States  in  the  manufacture  as  well 
as  in  the  growth  of  cotton,  and  if  the  future  changes  in 


428 


ECONOMIC  HISTORY. 


population,  wealth,  and  condition  of  the  different  sections  of 
this  country  shall,  in  the  future,  cause  the  increase  of  spin¬ 
dles  especially  in  coarse  fabrics,  to  be  planted  in  the  healthy 
hill  country  of  northern  Georgia,  eastern  Tennessee,  and  the 
Carolinas,  it  will  simply  be  the  greater  evidence  that  natural 
laws  are  paramount.  If  Georgia  has  twice  the  advantage 
over  Lancashire  that  New  England  now  possesses  it  will 
only  be  the  fault  of  the  people  of  Georgia  if  they  do  not 
reap  the  benefit  of  it. 

It  has  been  stated  that  our  present  rates  of  wages  in  our 
cotton  factories  are  higher  than  they  were  in  1860,  and  with 
our  increasing  prosperity  they  will  tend  to  advance ;  but  at 
the  same  time  the  cost  of  the  labor  in  the  finished  fabric  has 
been  reduced  by  the  greater  productive  power  of  the  machinery. 
The  fabrics  upon  which  by  far  the  largest  part  of  the  spin¬ 
dles  and  looms  of  the  country  are  operated  may  be  divided 
substantially  into  the  following  classes:  — 

1.  The  printing-cloth,  28  inches  wide  and  7  yards  to  the  pound. 
The  cost  of  mill  labor  in  making  this  fabric,  including  the  salaries, 
wages,  or  earnings  of  every  one  employed,  is  now  less  than  one 
cent,  or  a  half-penny,  a  yard. 

2.  The  heavy  sheeting,  36  inches  wide  and  the  heavy  drill,  30 
inches  wide,  each  weighing  from  2f  to  3  yards  to  the  pound.  The 
cost  of  mill  labor  in  making  these  fabrics  is  about  1\  cents  per 
yard. 

3.  Shirtings  and  sheetings,  30  to  36  inches  wide,  Nos.  20  to  30 
yarns,  each  weighing  from  3  to  4  yards  to  the  pound.  The  cost  of 
mill  labor  in  these  goods  is  from  to  2  cents  per  yard. 

4.  The  fine  sheeting  or  shirting,  from  30  to  40  inches  wide, 
Nos.  30  to  40  yarns,  weighing  from  3  to  4  yards  to  the  pound. 
The  cost  of  mill  labor  in  these  goods  is  from  to  3  cents  per 
yard. 

5.  Fabrics  of  a  similar  kind  to  the  above,  from  1  to  3  yards 
wide. 

6.  Heavy  cotton  duck,  cotton  grain-bags,  cotton  hose,  and  other 
special  articles. 

7.  Blue  denims,  stripes,  tickings,  brown  denims  and  duck,  and 
other  heavy  colored  goods,  substantial  ginghams,  cottonades,  and 
other  fancy  woven  fabrics  of  medium  or  heavy  weight. 


THE  COTTON  MANUFACTURES . 


429 


These  seven  classes  comprise  more  than  95  per  cent  of  our 
cotton  fabrics  in  weight;  to  them  are  to  be  added  lawns, 
woven  fabric  of  light  weight  for  dresses,  and  spool-cotton. 

In  respect  of  one  half  of  these  fabrics,  being  those  of  the 
heavier  grade,  our  proximity  to  the  cotton-field,  computed  at 
not  less  than  half  a  cent  per  pound,  oftener  three  quarters 
will  enable  the  New  England  manufacturer  to  pay  from  15  to 
20  per  cent  higher  wages  and  yet  to  make  the  goods,  other 
things  being  equal,  at  the  same  cost  as  his  competitor  in 
Lancashire.  On  a  large  portion  of  the  other  kinds  this  ad¬ 
vantage  in  the  cost  of  cotton  would  be  from  10  to  15  per 
cent. 

The  natural  advantages  cannot  work  immediate  results; 
the  ways  and  means  of  a  great  commerce  cannot  be  impro¬ 
vised  in  a  year,  hardly  in  a  generation.  Much  depends  on 
the  wisdom  of  our  legislators  in  framing  the  acts  under 
which  our  taxes  are  collected,  whether  customs  or  excise, 
and  yet  more  upon  our  adherence  to  a  specie  basis  in  our 
currency ;  but  in  the  long  run  the  only  reason  why  we  shall 
not  assume  a  constantly  increasing  share  in  the  cotton  manu¬ 
facture  of  the  world  will  be  the  free  choice  that  our  country 
offers  for  other  occupations  of  a  more  profitable  or  more 
desirable  kind. 

Reference  has  been  made  to  the  small  proportion  of  fine 
spinning  in  the  United  States.  Within  the  last  few  years 
great  progress  has  been  made  in  spinning  and  weaving 
fabrics  of  Nos.  60  to  100,  such  as  lawns  and  fine  dress  goods, 
and  also  in  spinning  fine  yarn  for  spool-cotton.  In  the  latter 
direction  yarns  as  fine  as  No.  120  are  now  spun  on  the  ring 
spinning-frame,  a  machine  invented  in  this  country  and 
more  used  than  any  other  for  warp  spinning,  and  now  being 
adopted  in  Europe.  Yarns  as  fine  as  550  are  spun  on  mules 
for  three-cord  sewing-cotton,  and  for  experiment  much  finer 
counts  have  been  reached.  It  has  often  been  alleged  that 
fine  yarns  could  not  be  as  well  spun  in  the  United  States  as 
in  England,  owing  to  the  dry  and  electrical  conditions  of  the 
atmosphere  during  a  considerable  part  of  the  year.  This 
difficulty  has  existed  in  some  degree,  although  not  so  as  to 


430 


ECONOMIC  HISTORY. 


preclude  fine  work  if  it  had  been  profitable  to  undertake  it ; 
but  as  far  as  this  difficulty  existed  it  has  lately  been  entirely 
removed  by  the  invention  of  a  very  simple  and  inexpensive 
apparatus  for  moistening  the  air  with  the  finest  spray  of  pure 
cold  water,  by  which  method  the  air  of  a  spinning  or  weav¬ 
ing-room  may  be  kept  at  any  desired  degree  of  humidity  in 
the  driest  day,  so  that  the  adverse  effect  of  electricity  is 
entirely  overcome. 

Whenever  the  condition  and  extension  of  our  market  will 
warrant  the  undertaking,  there  is  now  no  obstacle  to  our 
manufacturing  any  variety  of  cotton  fabric  that  is  in  de¬ 
mand,  either  coarse  or  fine. 

While  it  may  not  be  worth  while  to  give  historical  statistics 
in  relation  to  the  cotton  manufacture  of  this  country  in  the 
present  report,  a  few  words  may  well  be  devoted  to  changes 
in  the  work,  which  have  conduced  not  only  to  the  welfare  of 
the  people,  but  to  the  welfare  of  the  operatives  also. 

When  the  cotton  manufacture  was  first  established  in  the 
United  States  water-power  was  considered  essential  to  the 
work,  and,  as  a  rule,  the  location  of  mills  was  limited  to 
narrow  valleys,  or  places  where  there  was  room  only  for 
mills  of  several  stories  in  height.  The  first  mills  built  were 
very  considerable  structures  for  their  time,  but  they  were 
low-studded,  badly  lighted,  and  were  heated  by  stoves ;  and 
in  these  mills  the  operatives  were  compelled  to  work  under 
arduous  conditions  (owing  to  the  imperfection  of  the  machin¬ 
ery)  thirteen  to  fourteen  hours  a  day.  These  narrow  struc¬ 
tures  were  in  some  places  built  seven  stories  in  height.  All 
the  plans  were  made  with  reference  to  this  form  of  structure, 
whether  the  mill  was  to  be  operated  by  water-power  or  by 
steam,  until  quite  a  recent  period.  In  1860  the  “  normal  ” 
cotton-mill  (so  to  speak)  had  become  a  factory  four  or  five 
stories  high,  about  60  feet  wide,  varying  in  length  according 
to  the  amount  of  machinery,  high-studded,  well  lighted, 
thoroughly  well  ventilated,  and  heated  by  radiation  from 
steam-pipes. 

In  1866  the  machine  for  sizing  yarn,  known  as  the 
“  slasher  ”  was  first  imported,  displacing  the  machine  known 


THE  COTTON  MANUFACTURES. 


431 


as  the  a  dresser.  ”  In  the  use  of  the  slasher  one  man  and  a 
boy  working  in  a  thoroughly  well-ventilated  room,  at  a 
moderate  degree  of  heat,  took  the  place  of  seven  or  eight 
men  who  had  been  previously  employed  in  the  same  work  in 
a  room  which  was  of  necessity  kept  at  over  100°  F.,  the  at¬ 
mosphere  saturated  with  sour  starch.  This  change  removed 
the  only  really  objectionable  kind  of  work  from  the  cotton 
factory.  In  the  earlier  mills  the  apparatus  for  the  removal 
of  dust  from  the  factory  was  very  imperfect,  but  to-day  every 
room  even  including  those  in  which  the  cotton  is  opened,  is 
substantially  free  from  dust ;  and  it  happens  that  the  degree 
of  heat  and  of  humidity  required  for  the  best  work  of  the 
cotton  factory  is  one  which  conduces  in  great  measure  to  the 
health  of  the  operative^  perhaps  a  little  warmer  than  may  be 
desirable. 

At  the  present  time  another  change  is  in  progress.  The 
use  of  water-power  is  becoming  less,  its  development  for  the 
purpose  of  sale  having  never  proved  profitable.  The  power 
thus  developed  has  been  a  valuable  auxiliary  in  the  working 
of  the  factory,  but  as  a  matter  of  investment  the  development 
of  land  and  water-power  together  have  almost  without  ex¬ 
ception  failed  to  be  profitable. 

The  great  progress  in  the  construction  of  the  steam-engine 
and  in  the  economy  of  fuel  is  steadily  working  towards  a 
change  to  steam  as  the  principal  motive-power  for  the  cotton 
factory.  An  incidental  advantage  in  this  change  is  that  the 
factory  may  be  placed  nearer  to  the  principal  markets,  where 
it  can  be  more  conveniently  supervised  and  more  easily 
reached.  The  use  of  steam  also  renders  a  choice  of  location 
perfectly  feasible ;  and  the  model  factory,  one  or  two  stories 
high,  may  be  placed  upon  a  level  plain,  and  can  be  more 
easily  lighted  and  ventilated  and  more  economically  operated 
than  when  any  other  form  of  building  is  used.  Under  these 
new  conditions,  better  dwellings  for  the  operatives,  less 
crowded,  can  also  be  provided,  and  in  every  respect  the  work 
can  be  conducted  under  better  conditions. 

At  the  present  time  the  hours  of  labor  in  New  England, 
where  most  of  the  cotton  manufacturing  is  done,  vary  from 


432 


ECONOMIC  HISTORY. 


ten  to  eleven  hours  per  day.  This  great  change  has  been 
brought  about  by  a  gradual  comprehension  of  the  best  con¬ 
ditions  both  for  the  laborer  and  for  the  capitalist,  and  with¬ 
out  much  regard  to  legislation.  It  is  probable  that  ere  long 
ten  hours  will  be  the  limit  of  factory  work  throughout  New 
England,  either  by  process  of  legislation  or  through  the 
conviction  on  the  part  of  employers  that  any  longer  hours 
are  not  profitable,  —  a  conclusion  to  which  many  have  al¬ 
ready  come. 

A  great  change  has  also  in  the  progress  of  time  been 
effected  in  the  dwellings  in  which  the  factory  operatives 
live,  in  part  tending  towards  better  conditions,  in  part  to 
worse  conditions.  On  the  whole  there  has  been  less  average 
progress  in  this  direction  than  in  the  construction  and  opera¬ 
tion  of  the  mills  themselves.  The  choice  of  position,  how¬ 
ever,  which  is  now  given  by  the  greater  use  of  steam,  gives 
better  opportunities  for  scattering  the  dwelling-houses  over 
a  wider  area  at  little  cost. 

A  more  abundant  supply  and  choice  of  food  has  been 
effected  in  this  as  in  all  other  branches  of  work,  to  the  great 
benefit  of  the  operatives,  by  the  consolidation  and  more 
effective  service  of  railroads.  The  average  work  of  a  male 
operative  over  sixteen  years  of  age  in  a  textile  factory  will 
earn  enough  in  a  day  to  pay  for  the  transportation  of  meat 
and  bread  for  one  year,  one  thousand  miles,  or  from  Chi¬ 
cago  to  Lowell,  Lawrence,  or  Fall  River.  So  far  as  cost  is 
concerned,  the  great  fields  of  the  West  and  the  factories  of 
the  East  are  in  closer  proximity  than  if  the  factory  depended 
for  its  food  upon  its  own  immediate  neighborhood,  when 
served  only  by  wagon-roads.  The  same  changes  which  have 
so  greatly  reduced  the  railway  charges  between  East  and 
West  are  now  taking  place  between  North  and  South.  The 
charge  for  moving  cotton  is  becoming  less  year  by  year,  and 
it  will  soon  matter  little  where  the  cotton  factory  is  placed, 
so  far  as  distance  between  the  field  and  the  factory  is  con¬ 
cerned.  The  choice  may  be  made  so  as  to  secure  the  stimu¬ 
lus  of  a  moderately  cold  climate,  in  which  in-door  labor  is 
more  to  be  desired  than  out-door,  in  which  the  humidity  of 


THE  COTTON  MANUFACTURES. 


433 


the  atmosphere  is  measurably  uniform  or  is  not  subject  to 
extremes,  and  where  facilities  for  repairs  on  machinery  are 
close  at  hand,  and  the  population  is  sufficiently  dense  to 
assure  an  adequate  and  constant  supply  of  operatives, —  mills 
which  are  much  isolated  always  working  at  a  disadvantage. 

Great  changes  of  a  beneficial  kind  can  now  be  foreseen  in 
the  application  of  electricity  to  the  lighting  of  the  factory. 
The  developments  in  this  direction  are  also  such,  that,  what¬ 
ever  the  relative  cost  of  the  electric  light  as  compared  to  gas 
may  be,  it  is  yet  so  beneficial  in  other  respects,  that  no  fac¬ 
tory  manager  can  well  afford  to  dispense  with  it,  not  only 
because  of  the  more  perfect  work  which  its  use  assures,  but 
because  the  choice  of  the  operative  in  selecting  the  place  in 
which  to  work  will  render  the  use  of  the  electric  light  almost 
a  matter  of  necessity. 

In  conclusion,  it  may  be  said  that  the  progress  in  the  art 
of  manufacturing  cotton  fabrics  in  the  last  forty  years  has 
been  very  great,  distinctly  sustaining  the  rule  which  affects 
all  the  arts  to  which  modern  machinery  can  be  applied, 
namely,  that,  in  proportion  to  the  effectiveness  of  capital  in 
the  form  of  machinery  and  the  freedom  with  which  it  may 
be  applied,  the  cost  of  production  is  lessened  and  the  con¬ 
sumer  is  served  more  cheaply ;  while,  on  the  other  hand,  the 
wages  of  the  operatives  are  increased,  the  conditions  of  work 
made  better,  and  the  identity  of  interests  between  labor  and 
capital  are  established. 

It  may  be  said  that  in  the  absence  of  any  artificial  obstruc¬ 
tions  to  traffic  between  States  or  nations,  the  truest  guide  to 
the  place  where  the  lowest  cost  of  production  is  compassed 
may  be  found  by  ascertaining  where  the  wages  of  labor  are 
the  highest,  and  the  conditions  of  life  the  best ;  that  at  that 
point  the  lowest  cost  of  production  must  be  found  for  this 
reason :  both  wages  and  profits  are  derived  from  the  sale  of 
the  thing  produced ;  hence  it  follows  that  where  the  natural 
conditions  of  production  are  best,  the  machinery  most  ef¬ 
fective,  and  the  labor  the  most  intelligent  and  skilful,  the 
product  will  be  largest  at  the  least  effort  to  those  who  do  the 
work,  and  when  the  division  of  this  product  is  made  under 

28 


434 


ECONOMIC  HISTORY. 


the  conditions  of  absolutely  free  competition,  the  relative 
proportion  which  capital  can  secure  to  itself  will  be  least, 
even  though  its  absolute  share  be  greater  and  greater  as  the 
years  go  on;  but  the  share  which  the  laborer  will  receive 
will  increase  year  by  year,  both  absolutely  and  relatively. 
As  capital  increases  the  absolute  sum  of  profits  is  greater, 
but  the  relative  share  of  the  product  secured  by  capital  be¬ 
comes  less.  The  increase  of  capital  and  its  effective  use  by 
skilled  laborers  assure  a  larger  production,  and  the  workman 
obtains  a  larger  share  of  a  larger  product,  measured  in  kind 
or  in  wages  paid  in  money.  In  the  cotton-mill,  as  well  as 
in  many  other  arts,  special  skill  is  required,  but  perhaps 
less  general  intelligence;  therefore  a  lower  grade  of  opera¬ 
tives  may  be  employed  from  time  to  time  as  the  machinery 
becomes  more  automatic,  but  at  a  steadily  increasing  rate  of 
wages.  Invention  may,  therefore,  be  said  to  enable  all  con¬ 
ditions  of  men  to  attain  a  higher  plane  of  material  welfare, 
and  as  one  class  passes  from  the  factory  to  other  occupations 
which  offer  better  conditions  of  life,  new  improvements  ena¬ 
ble  those  who  could  not  do  the  factory  work  before,  to  under¬ 
take  and  carry  it  on.  Thus  it  has  been  in  the  past,  since 
the  farmers’  daughters  of  New  England  left  the  factory,  in 
which,  with  much  longer  hours  of  work,  they  earned  only 
about  one  half  the  wages  now  paid ;  but  those  who  have  suc¬ 
ceeded  them  could  not  then  have  been  capable  of  doing  the 
work  at  all  which  they  now  so  easily  accomplish. 


THE  IRON  AND  STEEL  INDUSTRIES. 


435 


THE  IRON  AND  STEEL  INDUSTRIES. 

From  Swank’s  Statistics  of  the  Iron  and  Steel  Production, 
Tenth  Census,  Yol.  II.  pp.  886-890. 

Important  Uses  of  Iron  and  Steel. 

The  people  of  the  United  States  are  the  largest  per  capita 
consumers  of  iron  and  steel  in  the  world,  and  of  all  nations 
they  are  also  the  largest  aggregate  consumers  of  these  pro¬ 
ducts.  Great  Britain  makes  more  iron  than  we  do,  but  she 
exports  about  one  half  of  all  that  she  makes.  She  exports 
more  than  one  half  of  the  steel  that  she  makes,  and  yet  makes 
but  little  more  than  this  country.  No  other  European  coun¬ 
try  equals  Great  Britain  either  in  the  per  capita  or  aggregate 
consumption  of  iron  and  steel.  This  country  is  not  now 
producing  as  much  iron  and  steel  as  it  consumes,  but  imports 
large  quantities  of  both  products,  Great  Britain  being  the 
principal  source  of  our  foreign  supply.  Our  exports  of  iron 
and  steel  are  only  nominal. 

A  simple  enumeration  of  some  of  the  more  important  uses 
to  which  iron  and  steel  are  applied  by  our  people  will  show 
how  prominent  is  the  part  these  metals  play  in  the  develop¬ 
ment  of  American  civilization  and  in  the  advancement  of 
our  greatness  and  power  as  a  nation.. 

We  have  built  almost  as  many  miles  of  railroad  as  the 
whole  of  Europe,  and  consequently  have  used  in  their  con¬ 
struction  almost  as  many  rails,  and  now  use  almost  as 
many  railroad  cars  and  locomotives.  At  the  close  of  1881 
this  country  had  100,000  miles  of  railroad,  Europe  had 
about  106,000  miles,  and  all  the  rest  of  the  world  had  about 
45,000  miles.  The  United  States  had  nineteen  miles  of 
railroad  to  every  10,000  of  population,  while  Europe  had  a 
little  more  than  three  miles  to  the  same  population.  Rail¬ 
roads,  it  is  well  known,  annually  consume  more  than  one 
half  of  the  world’s  production  of  iron  and  steel,  —  rails, 


436 


ECONOMIC  HISTORY. 


bridges,  cars,  and  locomotives  being  impossible  without 
these  metals.  The  street  railway  is  an  American  invention 
which  also  consumes  large  quantities  of  iron  and  steel,  and 
we  are  far  in  advance  of  every  other  nation  in  its  use.  We 
were  also  the  first  nation  in  the  world  to  introduce  elevated 
railways  especially  to  facilitate  travel  in  large  cities.  In  the 
construction  of  our  New  York  elevated  railways  beauty  of 
design,  fitness  of  parts,  and  strength  of  materials  have  been 
so  perfectly  combined  as  to  excite  the  admiration  of  all  who 
behold  them.  We  are  the  foremost  of  all  nations  in  the  use 
of  iron  and  steel  in  bridge-building  for  railroads  and  ordinary 
highways,  and  the  lightness  and  gracefulness  of  our  bridges 
are  nowhere  equalled,  while  their  strength  and  adaptability 
to  the  uses  to  which  they  are  required  are  nowhere  surpassed. 
In  the  use  of  iron  for  water-pipes  and  gas-pipes  we  are  prob¬ 
ably  in  advance  of  every  other  nation.  We  make  more  iron 
stoves  for  heating  halls  and  dwellings  and  for  the  purposes 
of  the  kitchen  than  all  the  rest  of  the  world,  and  in  the  use 
of  heaters  and  ranges  we  are  behind  no  other  nation.  Our 
household  stoves,  both  for  heating  and  cooking,  are  works  of 
real  art  as  well  as  of  utility.  They  are  ornaments  of  Ameri¬ 
can  homes,  instead  of  being  conveniences  simply.  Our  heat¬ 
ing  stoves  are  especially  handsome,  bright,  cheerful,  health¬ 
ful,  and  clean.  In  all  respects  they  form  the  best  combination 
of  desirable  qualities  yet  devised  for  the  heating  of  private 
dwellings.  Cooking  and  other  domestic  utensils  of  iron  have 
always,  even  in  colonial  days,  been  freely  used  in  American 
households.  We  make  liberal  use  both  of  cast  and  wrought 
iron  in  the  construction  of  public  and  private  buildings.  Our 
use  of  iron  for  these  purposes  has  in  late  years  been  quite 
marked,  and  in  no  respect  more  so  than  in  the  truly  artistic 
effects  which  we  give  to  this  metal.  We  probably  excel  all 
nations  in  the  use  of  iron  for  ornamental  purposes  in  connec¬ 
tion  with  masonry, brick-work, and  wood-work.  Fine  illustra¬ 
tions  of  the  artistic  combination  of  iron  with  other  materials 
may  be  seen  in  the  interior  of  the  new  State  Department 
building  at  Washington  and  in  the  interior  of  the  new  passen¬ 
ger  depot  of  the  Pennsylvania  railroad  at  Philadelphia.  We 


THE  IRON  AND  STEEL  INDUSTRIES. 


437 


lead  the  world  in  the  use  of  iron  and  steel  wire  for  fencing 
purposes,  and  we  have  more  miles  of  telegraph  wire  in  use 
than  any  other  country.  Barbed-wire  fencing  is  an  Ameri¬ 
can  invention.  We  have  made  creditable  progress  in  the  con¬ 
struction  of  iron  ships,  and  we  would  have  made  much  greater 
progress  if  the  same  encouragement  that  has  •  been  given  by 
other  nations  to  their  shipping  interests  had  been  given  to 
ours.  We  use  immense  quantities  of  plate-iron  in  the  stor¬ 
age,  transportation,  and  refining  of  petroleum,  in  the  produc¬ 
tion  of  which  nature  has  given  us  almost  a  monopoly.  The 
oil-wells  themselves  yearly  require  thousands  of  tons  of  iron 
pipes  for  tubing.  We  make  liberal  use  of  plate  and  sheet  iron 
in  the  construction  of  the  chimneys  of  steamboats  on  our  lakes 
and  rivers,  and  in  the  construction  of  factory,  rolling-mill, 
and  blast-furnace  chimneys,  and  the  stacks  of  blast-furnaces. 
American  planished  sheet-iron  has  almost  entirely  super¬ 
seded  Russia  sheet-iron  in  our  markets.  We  use  it  for  loco¬ 
motive  jackets,  in  the  manufacture  of  stoves  and  stove-pipe, 
and  for  many  other  purposes.  We  are  the  largest  consumers 
of  tin  plates  in  the  world,  —  Great  Britain,  their  principal 
manufacturer,  sending  us  annually  more  than  one  half  of  her 
whole  product.  Portable  and  stationary  engines  consume 
large  quantities  of  iron  and  steel.  Our  beautiful  steam  fire- 
engines  are  the  product  of  American  taste  and  skill,  if  they 
are  not  strictly  an  American  invention,  and  we  annually 
make  large  numbers  of  them  for  home  use  and  for  exporta¬ 
tion.  Anchors  and  chains,  cotton-presses  and  cotton-ties, 
sugar-pans  and  salt-pans,  and  general  foundry  and  machine 
work  annually  require  large  quantities  of  either  iron  or  steel. 
We  make  our  own  cotton  and  woollen  manufacturing  machin¬ 
ery,  and  nearly  all  the  other  machinery  that  we  use.  The 
manufacture  of  the  printing-presses  of  the  country  consumes 
immense  quantities  of  iron  and  steel.  No  other  country 
makes  such  free  use  of  the  printing-press  as  this  country. 
We  are  the  leading  agricultural  nation  of  the  world,  and 
hence  are  the  largest  consumers  of  agricultural  implements; 
but  we  are  also  in  advance  of  every  other  nation  in  the  use 
of  agricultural  machinery.  Our  use  of  iron  and  steel  in 


438 


ECONOMIC  HISTORY. 


agriculture  takes  rank  next  to  their  use  in  the  construction 
and  maintenance  of  railroads.  We  lead  all  nations  in  the 
manufacture  of  cut-nails  and  spikes.  Having  a  larger  and 
more  rapidly  increasing  population  than  any  other  country 
that  is  noted  for  its  consumption  of  iron,  we  are  consequently 
the  largest  consumers  of  nails  and  spikes  in  the  construction 
of  dwellings  and  public  buildings,  stores,  warehouses,  offices 
and  similar  structures.  Our  extended  and  varied  mining 
operations  consume  iron  and  steel  in  large  quantities.  So 
do  our  manufactures  of  scales  and  balances,  letter-presses, 
burglar-proof  and  fire-proof  safes,  sewing-machines,  and 
wagons  and  carriages.  Sewing-machines  are  an  American 
invention.  Considerable  quantities  of  iron  or  iron  and 
steel  are  used  for  sewer  and  other  gratings,  street-crossings, 
iron  pavements,  lamp-posts,  posts  for  awnings,  all  sorts  of 
small  hardware,  horseshoes  and  horseshoe  nails,  wire-rope, 
iron  hoops,  iron  cots  and  bedsteads,  woven-wire  mattresses, 
iron  screens,  iron  railings,  and  fire-arms.  In  the  manufac¬ 
ture  of  machine  and  hand  tools  and  general  cutlery  we  are 
excelled  by  no  other  nation,  and  in  the  use  of  machine  tools 
we  are  in  advance  of  every  other  nation.  In  general  cutlery 
our  saws  and  axes  especially  enjoy  a  world-wide  reputation. 
Not  the  least  important  use  to  which  iron  and  steel  are  put 
in  this  country  is  in  the  extension  of  the  iron  industry  itself, 
—  every  blast-furnace,  rolling-mill,  or  steel  works  that  is 
erected  first  devouring  large  quantities  of  these  products 
before  contributing  to  their  general  supply. 

In  the  substitution  of  steel  for  iron  this  country  is  rapidly 
progressing,  especially  in  the  construction  and  equipment  of 
its  railroads.  During  the  past  few  years  fully  two  thirds  of 
all  the  rails  that  have  been  laid  on  American  railroads  have 
been  made  of  Bessemer  steel,  and  at  present  a  still  larger 
proportion  of  steel  rails  is  required  by  our  railroad  com¬ 
panies.  On  several  American  railroads  the  boilers  of  all 
new  locomotives  are  now  required  to  be  made  of  steel,  and 
the  tendency  is  toward  the  exclusive  use  of  steel  for  locomo¬ 
tive  boilers,  and  its  general  use  for  stationary  and  marine 
boilers.  The  tires  of  American  locomotives  are  now  made 


THE  IRON  AND  STEEL  INDUSTRIES. 


439 


exclusively  of  steel,  and  the  fire-boxes  of  our  locomotives  are 
generally  made  of  steel.  The  steel  used  in  the  construction 
of  American  locomotives  is  now  chiefly  produced  by  the  open- 
hearth  process.  We  have  built  a  few  steel  bridges,  but  there 
is  no  marked  tendency  to  substitute  steel  for  iron  in  bridge¬ 
building.  Steel  is,  however,  largely  used  in  the  manufacture 
of  wire,  including  wire-fencing,  and  for  car  and  carriage 
axles,  carriage  tires,  fire-arms,  screws,  and  many  other  pur¬ 
poses.  But  little  steel  has  yet  been  used  in  this  country  for 
nails  and  horse-shoes. 

Mention  has  been  made  of  the  artistic  finish  of  some  of  our 
iron-work;  but  the  subject  seems  worthy  of  further  notice. 
It  is  not  only  in  stove-founding,  in  the  graceful  designs  of 
bridges  and  elevated  railways,  and  in  the  delicate  combina¬ 
tion  of  iron  with  other  materials  in  the  construction  and 
ornamentation  of  buildings  that  American  iron-workers  have 
displayed  an  exquisite  taste  and  a  bold  and  dexterous  touch. 
The  fine  arts  themselves  are  being  enriched  by  the  achieve¬ 
ments  of  our  iron-working  countrymen.  An  iron  foundry 
at  Chelsea,  in  Massachusetts,  has  recently  reproduced,  in 
iron  castings,  various  works  of  art  with  all  the  fidelity  and 
delicacy  of  Italian  iron-founders.  The  most  delicate  antique 
patterns  have  been  successfully  copied.  Shields  representing 
mythological  groups  and  classic  events,  medallions  contain¬ 
ing  copies  of  celebrated  portraits,  panels  containing  flowers 
and  animals,  an  imitation  of  a  Japanese  lacquer-tray  one 
sixteenth  of  an  inch  thick,  and  a  triumphal  procession  repre¬ 
sented  on  a  large  salver  comprise  some  of  the  work  of  the 
Chelsea  foundry.  Some  of  the  castings  have  been  colored  to 
represent  bronze,  and  others  to  represent  steel,  while  others 
again  preserve  the  natural  color  of  the  iron.  The  bronzed 
castings  resemble  beaten  work  in  copper.  Only  American 
iron  is  used.  The  ornamental  uses  to  which  art  castings  of 
iron  may  be  put  are  many,  and  as  they  can  be  cheaply  pro¬ 
duced  it  may  be  assumed  that  a  demand  will  ere  long  be 
created  for  them  that  will  be  in  keeping  with  the  artistic 
taste  which  has  been  so  generally  developed  in  our  country 
during  the  past  few  years. 


440 


ECONOMIC  HISTORY. 


We  conspicuously  fall  behind  many  other  nations  in  the 
use  of  iron  and  steel  for  military  purposes.  We  maintain 
only  a  small  standing  army  and  a  small  navy,  and  hence  have 
but  little  use  for  iron  or  steel  for  the  supply  of  either  of  these 
branches  of  the  public  service.  We  are  also  behind  many 
other  nations  in  the  use  of  iron  and  steel  sleepers  for  rail¬ 
way  tracks.  We  yet  have  an  abundance  of  timber  for  railway 
cross-ties,  and  hence  do  not  need  to  substitute  either  iron  or 
steel  cross-ties.  Except  possibly  as  an  experiment,  there  is 
not  an  iron  or  steel  cross-tie  in  use  in  this  country.  It  is  a 
singular  fact  that  we  still  import  many  blacksmith’s  anvils, 
their  manufacture  being  a  branch  of  the  iron  business  to 
which  we  have  not  yet  given  adequate  attention.  Anvils  of 
the  best  quality  are,  however,  made  in  this  country.  A  far 
more  serious  hiatus  in  our  iron  industry  is  found  in  the  al¬ 
most  total  absence  of  the  manufacture  of  tin  plates,  the  basis 
of  which  is  sheet-iron,  as  is  well  known.  As  we  can  import 
the  crude  tin  as  easily  as  we  import  other  commodities,  our 
failure  thus  far  to  manufacture  tin  plates  must  be  ascribed  to 
the  only  true  cause,  — our  inability  to  manufacture  sheet-iron 
and  coat  it  with  tin  as  cheaply  as  is  done  by  British  manu¬ 
facturers.  It  is  not  improbable  that  tin  ore  may  be  yet  dis¬ 
covered  in  our  own  country  in  sufficiently  large  quantities  to 
supply  any  domestic  demand  that  maj^  be  created  for  its  use. 

Conclusion.  — In  reviewing  the  historical  pages  of  this 
report  the  most  striking  fact  that  presents  itself  for  consid¬ 
eration  is  the  great  stride  made  by  the  world’s  iron  and  steel 
industries  in  the  last  hundred  years.  In  1788  there  were 
only  eighty-five  blast-furnaces  in  Great  Britain,  most  of 
which  were  small,  and  their  total  production  was  only  68,800 
tons  of  pig-iron.  In  1880  Great  Britain  had  967  furnaces, 
many  of  which  were  very  large,  and  their  production  was 
7,749,238  tons.  A  hundred  years  ago  there  were  no  rail¬ 
roads  in  the  world  for  the  transportation  of  freight  and  pas¬ 
sengers.  Iron  ships  were  unknown,  and  all  the  iron  bridges 
in  the  world  could  be  counted  on  the  fingers  of  one  hand. 
Without  railroads  and  their  cars  and  locomotives,  and  with¬ 
out  iron  ships  and  iron  bridges,  the  world  needed  but  little 


THE  IRON  AND  STEEL  INDUSTRIES. 


441 


iron.  Steel  was  still  less  a  necessity,  and  such  small  quan¬ 
tities  of  it  as  were  made  were  mainly  used  in  the  manufac¬ 
ture  of  tools  with  cutting  edges. 

The  great  progress  made  by  the  world’s  iron  and  steel 
industries  in  the  last  hundred  years  is  as  marked  in  the 
improvement  of  the  processes  of  manufacture  as  in  the  in¬ 
creased  demand  for  iron  and  steel  products.  A  hundred 
years  ago  all  bar-iron  was  laboriously  shaped  under  the  trip- 
hammer;  none  of  it  was  rolled.  Nor  was  iron  of  any  kind 
refined  at  that  time  in  the  puddling  furnace ;  it  was  all  refined 
in  forges,  and  much  of  it  was  made  in  primitive  bloomary 
forges  directly  from  the  ore.  Nearly  all  of  the  blast-furnaces 
of  a  hundred  years  ago  were  blown  with  leather  or  wooden 
bellows  by  water-power,  and  the  fuel  used  in  them  was  chiefly 
charcoal.  Steam-power,  cast-iron  blowing-cylinders,  and  the 
use  of  bituminous  coal  had  just  been  introduced.  Less  than 
sixty  years  ago  heated  air  had  not  been  used  in  the  blowing 
of  blast-furnaces,  and  fifty  years  ago  anthracite  coal  had  not 
been  used  in  them,  except  experimentally.  Thirty  years  ago 
the  Bessemer  process  for  the  manufacture  of  steel  had  not 
been  heard  of,  and  the  open-hearth  process  for  the  manufac¬ 
ture  of  steel  had  not  been  made  a  practical  success.  Thirty 
years  ago  the  regenerative  gas  furnace  had  not  been  invented. 
The  nineteenth  century  has  been  the  most  prolific  of  all  the 
centuries  in  inventions  which  have  improved  the  methods  of 
manufacturing  iron  and  steel,  and  which  have  facilitated 
their  production  in  large  quantities. 

The  next  most  important  fact  that  is  presented  in  the 
historical  chapters  of  this  report  is  the  astonishing  prog¬ 
ress  which  the  iron  and  steel  industries  of  the  United  States 
have  made  within  the  last  twenty  years.  During  this 
period  we  have  not  only  utilized  all  contemporaneous  im¬ 
provements  in  the  manufacture  of  iron  and  steel,  but  we  have 
shown  a  special  aptitude,  or  genius,  for  the  use  of  such  im¬ 
provements  as  render  possible  the  production  of  iron  and 
steel  in  large  quantities.  Enterprising  and  courageous  as 
the  people  of  this  country  have  always  been  in  the  manu¬ 
facture  of  iron  and  steel,  they  have  shown  in  the  last 


442 


ECONOMIC  HISTORY. 


twenty  years  that  they  have  in  all  respects  been  fully  alive 
to  the  iron  and  steel  requirements  of  our  surprising  national 
development.  If  we  had  not  applied  immense  blowing- 
engines  and  the  best  hot-blast  stoves  to  our  blast-furnaces 
our  present  large  production  of  pig-iron  would  have  been  im¬ 
possible.  If  we  had  not  built  numerous  large  rolling-mills 
we  could  not  have  had  'a  sufficient  supply  of  plate-iron  for 
locomotives  and  other  boilers,  the  hulls  of  iron  ships,  oil- 
tanks,  nails  and  spikes,  and  other  important  uses ;  nor  of 
sheet-iron  for  stoves  and  domestic  utensils ;  nor  of  tee,  angle, 
and  channel  iron  for  bridge-building  and  general  construc¬ 
tion  purposes;  nor  of  iron  rails  for  our  railroads;  nor  of  bar- 
iron  and  rod-iron  for  a  thousand  uses.  If  we  had  not  promptly 
introduced  the  Bessemer  process  the  railroads  of  the  country 
could  not  have  been  supplied  with  steel  rails,  and  without  the 
four  and  a  half  million  tons  of  American  steel  rails  that  have 
been  laid  down  in  the  past  twelve  years  our  trunk  railroads 
could  not  have  carried  their  vast  tonnage  of  agricultural  and 
other  products,  for  iron  rails  could  not  have  endured  the  wear 
of  this  tonnage.  If  we  had  not  established  the  manufacture 
of  crucible  steel  and  introduced  the  open-hearth  process  there 
would  have  been  a  scarcity  of  steel  in  this  country  for  the 
manufacture  of  agricultural  implements,  springs  for  railway 
passenger-cars,  tires  for  locomotives,  etc.  Foreign  countries 
could  not  in  late  years  have  supplied  our  extraordinary  wants 
for  pig-iron,  rolled  iron,  iron  and  steel  rails,  and  crucible 
and  open-hearth  steel,  for,  if  there  were  no  other  reasons, 
the  naturally  conservative  character  of  their  people  would 
have  prevented  them  from  realizing  the  magnitude  of  those 
wants.  If  our  iron  and  steel  industries  had  not  been  devel¬ 
oped  in  the  past  twenty  years  as  they  have  been  it  is  clear 
that  our  railroad  system  could  not  have  been  so  wonderfully 
extended  and  strengthened,  and  without  this  extension  of 
our  railroads  we  could  not  have  produced  our  large  annual 
surplus  of  agricultural  products  for  exportation,  nor  could 
our  population  have  been  so  largely  increased  by  immigration 
as  it  has  been. 

We  cannot  fully  comprehend  the  marvellous  nature  of  the 


THE  IRON  AND  STEEL  INDUSTRIES. 


443 


changes  which  have  taken  place  in  the  iron  and  steel  indus¬ 
tries  of  this  country  in  recent  years,  unless  we  compare  the 
early  history  of  those  industries  with  their  present  devel¬ 
opment. 

In  Alexander  Hamilton’s  celebrated  “  Report  on  the  Sub¬ 
ject  of  Manufactures,”  presented  to  Congress  on  the  5th  of 
December,  1791,  just  ninety  years  ago,  it  was  stated  with 
evident  satisfaction  that  “the  United  States  already  in  a 
great  measure  supply  themselves  with  nails  and  spikes,  ”  so 
undeveloped  and  primitive  was  her  iron  industry  at  that  time. 
In  the  preceding  year,  1790,  “Morse’s  Geography”  claimed, 
in  a  description  of  New  J ersey,  that  “  in  the  whole  State  it 
is  supposed  there  is  yearly  made  about  1,200  tons  of  bar- 
iron,  1,200  ditto  of  pigs,  and  80  of  nail  rods;”  and  in  1802 
it  was  boastingly  declared  in  a  memorial  to  Congress  that 
there  were  then  150  forges  in  New  Jersey,  “which  at  a 
moderate  calculation  would  produce  twenty  tons  of  bar-iron 
each  annually,  amounting  to  3,000  tons.”  In  1880  there 
were  several  rolling-mills  in  New  Jersey  and  several  hundred 
in  the  United  States  which  could  each  produce  much  more 
bar-iron  in  a  year  than  all  of  the  150  forges  of  New  Jersey 
would  produce  in  1802. 

Less  than  fifty  years  ago  the  American  blast-furnace  which 
would  make  four  tons  of  pig-iron  in  a  day,  or  twenty-eight 
tons  in  a  week,  was  doing  good  work.  We  had  virtually 
made  no  progress  in  our  blast-furnace  practice  since  colonial 
days.  In  1831  it  was  publicly  proclaimed  with  some  exulta¬ 
tion  that  “  one  furnace  erected  in  Pennsylvania  in  1830  will 
in  1831  make  1,100  tons  of  pig-iron.”  But,  as  George 
Asmus  has  well  said,  “a  time  came  when  men  were  no 
longer  satisfied  with  these  little  smelting-pots,  into  which  a 
gentle  stream  of  air  was  blown  through  one  nozzle,  which 
received  its  scanty  supply  from  a  leather  bag,  squeezed  by 
some  tired  water-wheel.”  After  1840  our  blast-furnace  prac¬ 
tice  gradually  improved,  but  it  was  not  until  about  1865  that 
any  furnace  in  the  country  could  produce  150  tons  of  pig-iron 
in  a  week.  Ten  years  later,  in  1875,  we  had  several  furnaces 
which  could  each  make  700  tons  of  pig-iron  in  a  week;  in 
1880  we  had  several  which  could  each  make  1,000  tons  in  a 


444 


ECONOMIC  HISTORY. 


week ;  and  in  1881  we  had  one  furnace  which  made  224  tons 
in  a  day,  1,857  tons  in  a  week,  and  5,598  tons  in  a  month. 

In  1810,  seventy  years  ago,  we  produced  only  917  tons  of 
steel,  none  of  which  was  crucible  steel.  In  1881,  fifty  years 
ago,  we  produced  only  about  2,000  tons  of  steel,  not  one 
pound  of  which  was  crucible  steel  of  the  best  quality.  So 
imperfect  were  our  attainments  as  steelmakers  in  1881  that 
we  considered  it  a  cause  of  congratulation  that  “American 
competition  had  excluded  the  British  common  blister  steel 
altogether.”  In  1880  we  had  virtually  ceased  to  make  even 
the  best  blister  steel,  better  steel  having  taken  its  place  and 
in  that  year  we  produced  1,247,835  gross  tons  of  steel  of  all 
kinds,  64,664  tons  of  which  were  crucible  steel.  Our  produc¬ 
tion  of  Bessemer  steel  and  Bessemer  steel  rails  in  1880  was 
larger  than  that  of  Great  Britain. 

It  was  not  until  1844  that  we  commenced  to  roll  any 
other  kind  of  rails  than  strap  rails  for  our  railroads,  and  not 
even  in  that  year  were  we  prepared  to  roll  a  single  ton  of  T 
rails.  In  1880  we  rolled  1,305,212  gross  tons  of  rails,  nearly 
two  thirds  of  which  were  steel  rails,  and  nearly  all  of  which 
were  T  rails. 

The  growth  of  the  iron  and  steel  industries  of  the  United 
States  during  the  present  century  is  perhaps  best  exemplified 
in  the  statistics  of  the  production  of  our  blast-furnaces  at 
various  periods.  In  1810  we  produced  53,908  gross  tons  of 
pig-iron  and  cast-iron;  in  1840  we  produced  315,000  gross 
tons;  in  1860  we  produced  821,223  gross  tons;  and  in  1880 
we  produced  3,835,191  gross  tons.  Our  production  in  1881 
will  be  about  4,500,000  gross  tons. 

The  position  of  the  United  States  among  iron  and  steel 
producing  countries  in  1880  is  correctly  indicated  in  the  fol¬ 
lowing  table  of  the  world’s  production  of  pig-iron  and  steel 
of  all  kinds,  which  we  have  compiled  from  the  latest  and 
most  reliable  statistics  that  are  accessible.  This  table  places 
the  world’s  production  of  pig-iron  in  1880  at  17,688,596 
gross  tons,  and  the  world’s  production  of  steel  in  the  same 
year  at  4,343,719  gross  tons.  The  percentage  of  pig-iron 
produced  by  the  United  States  was  nearly  22,  and  its  per¬ 
centage  of  steel  was  nearly  29. 


THE  IRON  AND  STEEL  INDUSTRIES. 


445 


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446 


ECONOMIC  HISTORY. 


Although  this  country  cannot  produce  iron  and  steel  as 
cheaply  as  European  countries  which  possess  the  advantages 
of  cheap  labor  and  proximity  of  raw  materials,  it  is  not  ex¬ 
celled  by  any  other  country  in  the  skill  which  it  displays  or 
the  mechanical  and  scientific  economies  which  it  practises  in 
any  branch  of  their  manufacture,  while  in  certain  leading 
branches  it  has  displayed  superior  skill  and  shown  superior 
aptitude  for  economical  improvements.  Our  blast-furnace 
practice  is  the  best  in  the  world,  and  it  is  so  chiefly  because 
we  use  powerful  blowing-engines  and  the  best  liot-blast  stoves, 
possess  good  fuel,  and  carefully  select  our  ores.  The  excel¬ 
lent  quality  of  our  pig-iron  is  universally  conceded.  Our 
Bessemer  steel  practice  is  also  the  best  in  the  world.  We 
produce  much  more  Bessemer  steel  and  roll  more  Bessemer 
steel  rails  in  a  given  time  by  a  given  amount  of  machinery, 
technically  termed  a  “  plant,  ”  than  any  of  our  European 
rivals.  No  controversy  concerning  the  relative  wearing 
qualities  of  European  and  American  steel  rails  now  exists, 
and  no  controversy  concerning  the  quality  of  American  Bes¬ 
semer  steel  ever  has  existed.  We  experience  no  difficulty  in 
the  manufacture  of  open-hearth  steel  in  the  Siemens-Martin 
furnace,  and  our  steel  which  is  thus  produced  is  rapidly  com¬ 
ing  into  general  use  side  by  side  with  crucible  steel.  In 
the  manufacture  of  crucible  steel  our  achievements  are  in 
the  highest  degree  creditable.  In  only  one  respect  can  it  be 
said  that  in  its  manufacture  we  fall  behind  any  other  coun¬ 
try;  we  have  not  paid  that  attention  to  the  manufacture  of 
fine  cutlery  steel  which  Great  Britain  has  done.  This  is, 
however,  owing  to  commercial  and  not  to  mechanical  reasons. 
American  crucible  steel  is  now  used,  without  prejudice,  in 
the  manufacture  of  all  kinds  of  tools,  and  in  the  manufacture 
of  carriage-springs  and  many  other  articles  for  which  the  best 
kinds  of  steel  are  required.  In  the  quantity  of  open-hearth 
and  crucible  steel  produced  in  a  given  time  by  a  given  plant, 
we  are  certainly  abreast  of  all  rivals.  The  largest  crucible 
steel-works  in  the  world  are  those  of  Park,  Brother,  &  Co., 
at  Pittsburg,  Penn.  Our  rolling-mill  practice  is  fully  equal 
to  the  best  in  Europe,  except  in  the  rolling  of  heavy  armor 


THE  IRON  AND  STEEL  INDUSTRIES. 


447 


plates,  for  which  there  has  been  but  little  demand,  and  in 
the  production  of  which  we  have,  consequently,  had  but  little 
experience.  The  quality  of  our  rolled  iron,  including  bar- 
iron,  plate-iron,  sheet-iron,  iron  hoops,  and  iron  rails,  is 
uniformly  superior  to  that  of  foreign  rolled  iron.  In  the 
production  of  heavy  forgings  and  castings,  as  well  as  all 
lighter  products  of  the  foundry  and  machine-shop,  this  coun¬ 
try  has  shown  all  the  skill  of  the  most  advanced  iron-working 
countries  in  Europe.  In  the  production  of  steel  castings  we 
have  exhibited  creditable  skill  and  enterprise,  and  we  are  in 
advance  of  all  countries  in  the  regular  use  of  the  Bessemer 
converter  for  this  purpose. 

All  of  our  leading  iron  and  steel  works,  and  indeed,  very 
many  small  works,  are  now  supplied  with  systematic  chemi¬ 
cal  investigations  by  their  own  chemists,  who  are  often  men 
of  eminence  in  their  profession.  The  managers  of  our  blast¬ 
furnaces,  rolling-mills,  and  steel-works  are  themselves  fre¬ 
quently  well-educated  chemists,  metallurgists,  geologists,  or 
mechanical  engineers,  and,  sometimes,  all  of  these  combined. 
Our  rapid  progress  in  increasing  our  production  of  iron  and 
steel  is  not  merely  the  result  of  good  fortune  or  the  possession 
of  unlimited  natural  resources,  but  is  largely  due  to  the  pos¬ 
session  of  accurate  technical  knowledge  by  our  iron-masters, 
and  by  those  who  are  in  charge  of  their  works,  combined 
with  the  characteristic  American  dash  which  all  the  world 
has  learned  to  respect  and  admire.  The  “  rule  of  thumb  ” 
no  longer  governs  the  operations  of  the  iron  and  steel  works 
of  this  country. 

A  feature  of  our  iron  and  steel  industries  which  has  at¬ 
tended  their  marvellous  productiveness  in  late  years  is  the 
aggregation  of  a  number  of  large  producing  establishments 
in  districts,  or,  “centres,”  in  lieu  of  the  earlier  practice  of 
erecting  small  furnaces  and  forges  wherever  sufficient  water¬ 
power,  iron  ore,  and  charcoal  could  be  obtained.  This  ten¬ 
dency  to  concentration  is,  it  is  true,  not  confined  to  our  iron 
and  steel  industries,  but  it  is  to-day  one  of  the  most  powerful 
elements  that  influence  their  development.  It  had  its  begin¬ 
ning  with  the  commencement  of  our  distinctive  rolling-mill 


448 


ECONOMIC  HISTORY. 


era,  about  1830.  In  colonial  days  and  long  after  the  Revo¬ 
lution  our  iron-making  and  steel-making  establishments  be¬ 
longed  to  the  class  of  manufacturing  enterprises  described  by 
Zachariah  Allen,  in  his  “Science  of  Mechanics,”  in  1829. 
“The  manufacturing  operations  in  the  United  States  are  all 
carried  on  in  little  hamlets,  which  often  appear  to  spring  up 
in  the  bosom  of  some  forest,  gathered  around  the  waterfall 
that  serves  to  turn  the  mill-wheel.  These  villages  are  scat¬ 
tered  over  a  vast  extent  of  country,  from  Indiana  to  the 
Atlantic,  and  from  Maine  to  North  Carolina,  instead  of  being 
collected  together,  as  they  are  in  England,  in  great  manu¬ 
facturing  districts.  ”  While  these  primitive  and  picturesque, 
but  unproductive,  methods  could  not  forever  continue,  it  is 
greatly  to  be  regretted  that  our  manufactures  of  iron  and 
steel  and  other  staple  products  could  not  have  grown  to  their 
present  useful  and  necessary  proportions  unattended  by  the 
evils  which  usually  accompany  the  collection  of  large  manu¬ 
facturing  populations  in  small  areas. 

Upon  the  future  prospects  of  iron  and  steel  industries  it  is 
unnecessary  for  us  to  dwell.  Our  resources  for  the  increased 
production  of  iron  and  steel  for  an  indefinite  period  are 
ample,  and  all  other  essential  conditions  of  continued  growth 
are  within  our  grasp.  We  are  to-day  the  second  iron-mak¬ 
ing  and  steel-making  country  in  the  world.  In  a  little  while 
we  shall  surpass  even  Great  Britain  in  the  production  of  steel 
of  all  kinds,  as  we  have  already  surpassed  her  in  the  pro¬ 
duction  of  Bessemer  steel  and  in  the  consumption  of  all  iron 
and  steel  products.  The  year  1882  will  probably  witness  this 
consummation.  We  are  destined  also  to  pass  Great  Britain 
in  the  production  of  pig-iron.  These  conditions  and  results 
are  certainly  gratifying  to  our  national  pride,  for,  of  them¬ 
selves,  they  assure  the  ultimate  pre-eminence  of  the  United 
States  among  all  civilized  countries.  If  it  be  true,  as  recorded 
in  the  second  chapter  of  Daniel,  that  “  iron  breaketh  in  pieces 
and  subdueth  all  things,”  the  country  which  produces  and 
consumes  the  most  iron  and  steel  must  hold  the  first  rank. 
When  the  United  States  takes  the  position  which  it  is  des¬ 
tined  soon  to  take,  as  the  leading  iron  and  steel  producing 


I 


THE  IRON  AND  STEEL  INDUSTRIES.  449 

as  well  as  consuming  country,  the  saying  of  Bishop  Berkeley, 
that  “Westward  the  course  of  empire  takes  its  way,”  will 
receive  a  new  interpretation;  for  the  iron  industry,  which 
had  its  beginning  in  Asia,  and  then  passed  successively  to 
the  countries  along  the  Mediterranean,  upon  the  Rhine,  and 
in  the  north  of  Europe,  will  then  have  made  the  circuit  of 
the  world. 


/ 


450 


ECONOMIC  HISTORY. 


XVI. 

LES  DETTES  PUBLIQUES. 

From  Neymarck’s  Les  Dettes  Publiques  Europeennes,  pp.  86-102. 

I.  — AUGMENTATION  DES  DETTES  PUBLIQUES  DEPUIS  1870. 

yVANS  cette  longue  enumeration  de  chiffres,  ce  qui  frappe 
-*-^tout  d’abord  l’esprit,  c’est  l’augmentation  considerable 
de  la  dette  publique  des  Etats  Europ^ens  depuis  1870.  Cette 
dette  s’elevait  a  75  milliards  en  1870  environ;  elle  atteint 
115  milliards  en  1886.  L’augmentation  n’est  pas  moindre 
de  40  milliards.1 

Nous  avons  pris  a  dessein  cette  date  de  1870  qui  nous 
rappelle  les  plus  grands  malheurs  que  notre  pays  ait  jamais 
supports,  les  lourdes  charges  qui  ont  ete  la  consequence  de 

1  D’apres  le  journal  de  la  “  Societe  de  statistique  ”  (avril,  1867),  la  dette 
publique  d’Europe  s’elevait,  en  1865-1866,  aux  chiffres  suivants :  — 

D'penses  totales  des  budgets . 10  milliards  508  millions. 

Capitalisation  des  dettes . 66  “  013  “ 

Int6ret  et  amortissement . 2  “  438  “ 

La  population  de  l’Europe  etait  evalue  a  291,738,379  habitants ;  la  dette  par 
habitant  representait  226  fr.  30.  \ 

M.  Paul  Boiteau,  dans  son  article  sur  le  budget  general  de  l’Ltat,  insere  dans 
le  Dictionnaire  des  finances  de  M.  Leon  Say,  a  reuni  sous  le  titre  de :  “  Budgets 
Europeens”  la  plupart  des  budgets  du  continent,  et  pour  en  faciliter  l’etude,  il 
a  place  en  regard  du  montant  des  depensefe  prevues  pour  Texercice  1885,  le 
montant  des  dettes  consolidees  et  autres  qui  grevent  l’actif  des  differents  Etats 
ainsi  que  le  montant  des  depenses  militaires  et  celles  du  service  de  la  Dette  et 
de  l’amortissement.  II  obtient  les  chiffres  suivants  :  — 

Provisions  totales  des  dOpenses  budgOtaires  annuelles  .  18  milliards  848  millions. 
Capitalisation  des  dettes  consolidOes,  des  dettes  amortis- 

sables,  annuitOs  diverses,  etc . 108  431  “ 

DOpenses  du  service  des  dettes  et  de  l’amortissement  .  4  “  864  “ 

DOpenses  militaires,  guerre  et  marine . 4  “  439  “ 

On  pourra  comparer  ces  chiffres  it  ceux  que  nous  donnons  plus  loin. 


LES  DETTES  PUBL1QUES. 


451 


la  guerre,  le  fardeau  qui  pese  sur  nous  tous.  La  guerre  de 
18T0  a  coute  a  la  France  plus  de  10  milliards ;  sans  elle  nous 
ne  serions  pas  groves  d’impots  ecrasants,  et  aucun  peuple  ne 
supporterait  plus  facilement  que  nous  le  poids  de  sa  dette 
publique. 

Aucun  pays  n’a,  en  effet,  subi  des  desastres  aussi  grands 
que  les  nOtres ;  aucun  n’a  eu  une  indemnite  de  5  milliards  a 
payer  a  l’etranger ;  aucun  n’a  du  reconstituer  sa  puissance 
militaire,  son  materiel  de  guerre ;  aucun  n’a  eu  a  refaire,  pour 
ainsi  dire,  la  patrie  elle-meme  tout  entiere.  Et  cependant  que 
voyons-nous  ?  A  l’exception  de  l’Angleterre  qui,  par  suite 
de  divers  remboursements  d’annuit^s,  a  pu  diminuer  sa  dette 
de  1, 350  millions  ;  a  l’exception  du  Danemarck  qui,  par  suite  de 
conversions  heureusement  effectuees,  a  pu  reduire  sa  dette 
de  20  millions,  tous  les  pays  se  sont  endettes  depuis  1870 
dans  des  proportions  dnormes.  Yoici  sur  ce  point  quelques 
chiffres  precis.  Nous  rangeons  les  Etats  par  ordre  d’accroisse- 
ment  de  leurs  dettes  depuis  1870. 


AUGMENTATION  DU  CAPITAL  NOMINAL  DE  PLUSIEURS 
DETTES  PUBLIQUES  DEPUIS  1870. 


France  . 

Russie 1 . 

Prusse . 

....  11 

....  3 

217  millions. 

Italie . 

it 

132 

Hongrie . 

it 

249 

Autriche . 

....  1 

it 

770 

Espagne  . 

....  1 

it 

300 

Belgique . 

....  1 

a 

89 

Roumanie  .  . 

701 

Allemagne . 

526 

Saxe . 

388 

Grece . 

270 

Serbie . 

244 

Wiirtemberg . 

194  “ 

Suede . '  .  . 

181  “ 

Hambourg . 

24 

Finlande . 

20 

Cette  augmentation  du  capital  nominal  des  dettes  publiques 
europ^ennes  qui  atteint,  depuis  1870,  40  milliards  environ, 


1  Augmentation  depuis  1866. 


452 


ECONOMIC  HISTORY. 


a  eu  pour  consequence  l’augmentation  des  interets  et  des 
amortissements  annuels  pour  les  emprunts  contractes,  l’ac- 
croissement  des  depenses  totales  des  budgets,  une  surcharge 
dans  les  impots.  Combien  ne  serions-nous  pas  alleges  si 
nous  n’avions  pas  a  payer  chaque  annee  les  lourds  impots  qui 
grevent  notre  commerce  et  notre  industrie,  et  qui,  s’ajoutant 
aux  frais  de  production,  ont  rendu  la  concurrence  a  nos 
produits  d’autant  plus  facile  ?  Toutes  proportions  gardees, 
les  pays  d’Europe  souffrent,  comme  nous,  de  ces  lourdes 
charges  qui,  dans  tous  les  pays,  oberent  les  contribuables. 
C’est  la  guerre,  toujours  la  guerre*  qui  redoit  aux  budgets. 
Depuis  seize  ans,  les  budgets  de  la  guerre  et  de  la  marine  ont 
coute  a  la  France  plus  de  11  milliards,  c’est-a-dire  plus  de  700 
millions  par  an ;  l’Allemagne  et  la  Russie  n’ont  pas  d^pense 
moins  de  10  millards,  chacun  pendant  la  meme  p^riode, 
l’Autriche  et  l’ltalie  presque  le  meme  chiffre.  Voila  done 
cinq  grands  pays  qui,  en  vue  d’une  guerre  probable,  d^pensent 
tous  les  ans  de  500  a  900  millions,  depuis  seize  ans.  Que 
couterait  done  la  guerre  elle-meme  ? 

Les  Etats  europ^ens  paient  annuellement  pour  leurs  depenses 
de  la  guerre  et  de  la  marine  a  peu  pres  les  memes  sommes  que 
pour  l’intdret  et  l’amortissement  de  leurs  dettes.  D’apres  les 
derniers  budgets,  ainsi  que  le  prouvent  les  chiffres  que  nous 
publions  plus  loin,  la  guerre  et  la  marine  coutent  a  l’Europe 
4  milliards  528  millions,  alors  que  l’intdret  et  l’amortissement 
des  dettes  publiques  r^clament  5  milliards  343  millions.  En 
voici  le  relev6  :  — 


LES  DETTES  PUBLIQUES. 


453 


II.  —  DISPENSES  DE  LA  GUERRE,  DE  LA  MARINE,  CAPITAL 
NOMINAL  ET  INT^R^TS  DES  DETTES. 


Etats. 

Exercices  financiers. 

Capital 
nominal  de 
la  dette. 

IntGrets 
et  amort, 
ann. 

Depenses 

ann. 

Guerre  et 
marine. 

Prusse  .  . 

• 

ler  avril,  1886  .  . 

Milliards- 

Millions. 

4.814 

Millions. 

220  I 

Millions. 

539.1 

Allemagne . 

31  decembre,  1886  . 

526 

20.1  ( 

Autriche  . 

31  decembre,  1884  . 

9.288 

389.9  [ 

342 

Hongrie 

31  decembre,  1884  . 

3.178 

206.8  J 

Wiirtemberg 

31  decembre,  1885  . 

525 

21.5 

Saxe .  .  . 

31  decembre,  1885  . 

800 

33.2 

Hambourg . 

31  decembre,  1883  . 

178 

8.7 

Baviere .  . 

ler  avril,  1886  .  . 

1.790 

61.1 

Bade .  .  . 

31  decembre,  1885  . 

53 

2.1 

Etats  allemands . 

31  decembre,  1885  . 

268 

11 

Italie  .  . 

31  decembre,  1885  . 

11.131 

532 

342.5 

Suede  .  . 

31  decembre,  1885  . 

345 

16.4 

35.5 

Norwege  . 

30  juin,  1885  .  .  . 

151 

6 

18.3 

Danemark 

31  decembre,  1885  . 

274 

12.4 

23 

Pays-Bas  . 

31  decembre,  1885  . 

2.260 

69.5 

69.5 

Belgique  . 

31  decembre,  1885  . 

1.771 

86.5 

45.6 

Espagne  . 

ler  juillet,  1886  .  . 

6.042 

274.1 

200.3 

Portugal  . 

ler  juillet,  1886  .  . 

2.821 

89.3 

39.3 

Angleterre*  1 

31  mars,  1885  .  . 

17.829 

737.5 

740.2 

Suisse  .  . 

ler  janvier,  1886  . 

32 

1.8 

17.1 

Serbie  .  . 

13  juin,  1886  .  .  . 

244 

13.7 

16.2 

Roumanie  . 

ler  avril,  1887  .  . 

729 

59.2 

28.5 

Grece  .  . 

ler  janvier,  1886  . 

348 

33 

23 

Turquie 

1880-1881  .... 

2.622 

55.4 

200 

Bulgarie 

ler  janvier,  1885  . 

•  •  •  • 

2.1 

Finlande  . 

31  de'cembre,  1885  . 

65 

5.9 

6.1 

Russie  .  . 

31  decembre,  1885  . 

18.028 

1.038 

982.4 

France  .  . 

31  decembre,  1886  . 

31.000 

1.336 

859.5 

Totaux  . 

117.112 

5.343.2 

4.528.1 

Dans  quelles  proportions  6normes  les  dettes  publiques  de 
toute  l’Europe  ne  pourraient-elles  pas  etre  rdduites  si  les 
depenses  de  la  guerre  n’absorbaient  pas  tous  les  ans  plus  de 
85%  de  ces  memes  dettes  ?  Toutes  les  puissances  euro- 
peennes  ont  des  embarras  financiers  ;  toutes  ou  presque  toutes 
augmentent  ou  ont  besoin  d’augmenter  leurs  impbts.  Toutes, 
sans  exception,  font  des  armements  considerables.  Cette 

1  D’apres  une  note  de  l’honorable  M.  Hangcosck,  de  la  Societe  de  statistique 
de  Londres,  de  fin  mars,  1884,  a  fin  mars,  1885,  l’Angleterre  paie  comme  inter^t 
22,000,000  £,  et  7,000,000  £  comme  amortisseinent,  soit  au  total  29,500,000  £. 


454 


ECONOMIC  HISTORY . 


situation  presente  les  plus  graves  dangers  et  plus  que  jamais 
.cependant,  le  maintien  de  la  paix  est  n^cessaire  a  l’Europe 
pour  consolider  son  credit,  am&iorer  l’etat  de  ses  finances, 
donner  de  l’essor  et  de  la  confiance  au  commerce  et  a 
l’industrie. 

III.— LES  CONVERSIONS  DE  RENTES  A  L’LtR ANGER  ET  EN 

FRANCE. 

Et  cependant,  malgre  les  charges  de  toute  nature  qui  pesent 
sur  les  Etats,  les  rentes  de  ces  memes  pays  se  sont  negocides 
pendant  l’annee  1886  presque  toutes  aux  plus  hauts  cours 
qu’elles  aient  cotes  depuis  1870.  Non  seulement,  gr&ce  a 
l’abondance  des  capitaux  et  a  l’abaissement  du  taux  de 
l’intdret,  les  fonds  publics  ont  haussd,  mais  il  a  ete  realise, 
en  matiere  de  finances,  des  progress  considerables. 

Les  Etats,  non  plus  que  les  villes  et  les  societes  industrielles 
ou  financi^res,  n’hesitent  pas  a  effectuer,  sur  une  tres  large 
echelle,  des  operations  qu’on  eut  a  peine  osd  concevoir  il  y  a 
moins  de  trente  ans. 

Aujourd’hui  des  Etats,  dontla  puissance  financi^re  a  toujours 
ete  relativement  restreinte,  peuvent  contracter  des  emprunts 
qui  ddpassent  de  beaucoup  ceux  que  naguere  encore  des 
nations  riches  n’eussent  tenths  qu’avec  apprehension. 

Toutes  les  combinaisons  auxquelles  peuvent  preter  les  fi¬ 
nances  d’fitat  qui  etaient  si  longtemps  restees  dans  le  domaine 
de  la  theorie,  sont  pleinement  entrees  dans  la  pratique  et  se 
realisent  couramment.  Bien  des  prejuges  economiques  et 
financiers  se  sont  dissipes  ;  bien  des  principes,  encore  contestes 
naguere,  ont  triomphe  et  se  sont  imposes. 

Le  credit  a  acquis  une  force  d’expansion  inou'ie ;  les  fonds 
publics,  les  valeurs  mobilieres  se  sont  de  plus  eh  plus  repan- 
dues,  vulgarisees,  democratisees  en  quelque  sorte.  Leur 
grande  facilite  de  circulation,  leur  mobilite,  leur  diffusion, 
leur  accessibilite  a  toutes  les  fortunes,  petites  ou  grandes,  leur 
ont  assure  une  favour  que  l’on  pout  trouver  excessive,  mais 
qui  est,  a  divers  points  de  vue,  tres  justifiee.  Cet  essor  de  la 
fortune  mobiliere  a  determine  une  veritable  revolution  dans 
les  conditions  financieres  de  Texistence  des  peuples. 


LES  DETTES  PUBLIQUES. 


455 


Emprunts,  unifications  de  dettes,  conversions,  sont  dcs 
operations  devenues  familieres  meme  aux  moindres  Etats. 
Et,  chose  assez  etrange,  c’est  la  France  qui,  apres  avoir  dtd, 
avec  l’Angleterre,  l’initiatrice  des  grandes  reformes  finan- 
cieres,  a  6t6  depuis  quelques  anndes,  parmi  les  nations,  la  plus 
timide  a  realiser  les  combinaisons  heureuses,  legitimes,  profi- 
tables,  que  la  puissance  et  la  solidite  de  son  credit  lui  rendent 
si  faciles. 

Rien,  en  effet,  de  plus  curieux  a  observer,  autour  de  nous, 
que  les  nombreuses  operations  de  conversion  deja  accomplies 
avec  succes  ou  en  voie  de  preparation.  Si  on  peut  reprocher 
a  certains  Etats  une  propension  trop  grande  a  emprunter,  il 
faut  bien  reconnaitre  qu’ils  se  preoccupent  aussi,  pour  la 
plupart,  de  n’emprunter  qu’au  plus  bas  prix  possible.  Des 
que  leur  credit  s’etend  et  s’ameliore,  ils  s’efforcent  de  rem- 
placer  les  anciennes  dettes  couteuses,  onereuses,  par  des 
dettes  plus  legeres,  contractees  a  un  taux  moins  Meve.  Ce 
sont  maintenant  des  puissances  financieres  de  second  et  de 
troisieme  ordre  qui  nos  donnent  l’exemple.  Dans  cet  ordre 
d’iddes  et  de  faits,  il  n’est  certainement  pas  inutile  d’examiner 
comment  se  sont  effectuees  les  conversions  recentes  et  d’in- 
diquer  les  divers  proced^s  jusqu’ici  employes. 

Depuis  1870,  deux  fonds  d’Etats  fran^ais  ont  dte  l’objet 
d’une  conversion  :  l’emprunt  Morgan,  et  la  rente  5%.  On  se 
rappelle  comment  elles  s’effectuerent :  on  offrit  aux  porteurs 
d’obligations  Morgan  6%,  le  meme  revenu  en  rente  3^, 
moyennant  une  soulte  de  124  fr.  par  obligation.  Les  porteurs 
de  rentes  5%  eurent  a  opter  entre  le  remboursement  a  100  fr. 
de  leurs  rentes  et  l’^change  contre  un  nouveau  titre  de 
rente  4J%  non-convertible  avant  un  delai  de  10  ans  qui 
expire  en  1893. 

La  Belgique  a  op^rd  trois  conversions  :  son  4J  est  devenu 
du  4%,  puis  du  3%.  Pour  la  premiere  operation,  elle  eut 
immediatement  recours  a  un  syndicat  de  banquiers,  qui  se 
cliargeait  du  placement  de  la  rente  nouvelle,  tandis  que  l’Etat 
operait  le  retrait  de  la  rente  convertie.  Pour  la  seconde  con¬ 
version,  le  gouvernement  beige  voulut  operer  seul  et  emettre 
directement  sa  rente  nouvelle;  il  n’obtint  pas  tout  le  succes 


456 


ECONOMIC  HISTORY. 


desir6  et  dut,  apres  des  essais  peu  favorables,  accepter  le 
concours  qui  lui  avait  6t6  donnd  pr^cddemment. 

Tout  recemment,  ainsi  qu’on  l’a  vu  dans  le  cours  de  cette 
etude,  la  Belgique  a  realise  une  troisieme  conversion  en  con- 
vertissant  ses  rentes  4%  contre  du  3J%.  Cette  operation, 
effectu^e  directement  par  le  Tr^sor,  obtint  un  plein  succes. 

La  Suede  a,  elle  aussi,  transform^  successivement  son  4|  en 
4%  et  en  3|%  en  recourant  a  l’intermddiaire  des  grandes 
maisons  de  banque.  Celles-ci  ^mettaient  sur  les  marches 
etrangers  la  nouvelle  rente  suedoise,  tandis  que  1^’tat  restait 
charge  du  retrait  des  anciens  titres. 

On  conQoit  que  l’intervention  des  syndicats  et  des  groupes 

financiers  soit,  pour  ainsi  dire,  l’unique  moyen  des  petits 
/ 

Etats  qui  n’ont  pas  de  marcbe  national.  II  est  certain  que  la 
Roumanie,  par  exemple,  n’a  pu  effectuer  la  conversion  de  sa 
dette  6%  que  grace  au  concours  de  puissantes  maisons  aux- 
quelles  elle  s’est  adressde.  Ce  sont  ces  derniSres  qui  plagaient 
la  nouvelle  rente  tandis  que  l’fitat  remboursait  l’ancienne. 

L’Espagne,  lors  de  la  r^cente  conversion  de  ses  emprunts 
de  Tile  de  Cuba,  s’est  adress^e  a  un  groupe  de  banquiers :  elle 
s’entendait  avec  eux  pour  le  prix  de  la  nouvelle  rente  a  crder, 
et  avec  le  produit  du  nouvel  emprunt  remboursait  des  dettes 
anciennes  contracts  a  plus  gros  int^ret. 

Les  grands  Etats  qui  ont,  presque  tous,  d’importants 
marches  financiers  ne  se  croient  cependant  pas  toujours 
assez  surs  de  leurs  propres  forces  pour  d^daigner  le  concours 
des  banques  et  des  institutions  de  credit.  Sans  ces  hautes 
influences,  aucune  operation  de  credit  importante  ne  pourrait, 
sans  doute,  acqu^rir  un  caractere  international  et  obtenir  la 
participation  des  marches  extdrieurs.  Aussi  toutes  les  con¬ 
versions  opdr^es  dans  de  larges  proportions  ne  l’ont-elles  6t6 
qu’avec  la  participation  des  syndicats. 

La  Hongrie  a  effects  la  conversion  de  sa  rente  6%  en  rente 
4 °lo  en  or,  et  elle  prepare,  en  ce  moment  meme,  une  opera¬ 
tion  du  meme  genre  sur  d’autres  dettes.  Ici,  les  banquiers, 
groupes  en  vue  de  cette  transformation,  se  sont  charges  k  la 
fois  et  du  placement  de  la  rente  nouvelle  et  du  retrait  de 
la  rente  ancienne.  Le  remboursement  au  pair  n’est  devenu 


LES  DETTES  PUBLIQUES. 


457 


obligatoire  pour  les  porteurs  de  6%  hongrois  qu’a  Tissue  de 
Top4ration  qui  s’est  effectu^e  par  fractions  ^chelonnees.  La 
loi,  qui  a  fix£  les  conditions  dans  lesquelles  cette  conversion 
fut  autoris^e,  etait  con^ue  presque  dans  les  memes  termes  que 
le  projet  que  nous  formulions  nous-meme  d£s  le  rnois  d’aout, 
1876, 1  en  vue  de  la  conversion  6ventuelle  du  5%  fran§ais. 

En  Allemagne,  les  conversions  de  fonds  prussiens,  bavarois, 
et  wurtembergeois  se  sont  op^r^es  par  remission  d’emprunts 
dont  le  produit  a  servi  au  remboursement  des  anciennes 
rentes. 

A  Tdtranger,  il  nous  reste  a  citer,  au-dessus  de  tous,  l’ex- 
emple  des  Etats-Unis  qui  ont  accompli  avec  une  habilete  et  un 
esprit  de  suite  merveilleux  des  conversions  suceessives  dans 
les  conditions  les  plus  heureuses  et  les  plus  favorables,  sans 
que  les  particuliers  aient  jamais  eu  a  souffrir  des  conse¬ 
quences  de  ces  transformations  r^p^tees.  Grace  a  la  pr^voy- 
ance  avec  laquelle  l’Am^rique  du  Nord  avait  cre£  ses  rentes 
par  series,  des  conversions  partielles  ont  pu  se  succeder 
rapi dement ;  et  Ton  a  vu  en  peu  d’annees  du  6%  se  trans¬ 
former  en  5%,  puis  en  4^,  puis  en  Zoj0.  Ces  operations 
nombreuses,  les  fitats-Unis  les  ont  effectuees  directement  sur 
leurs  propres  marches  et  a  l’exterieur  avec  le  concours  de 
grandes  maisons  de  banque. 

Mais,  en  dehors  des  exemples  que  nous  ont  donnes  les 
autres  nations,  nous  pourrions  rappeler  ceux  que,  sous  des 
formes  diverses,  nous  ont  offerts  nos  departements  fran§ais  et 
nos  propres  villes.  La  encore,  nous  trouvons  des  efforts  tr£s 

louables  et  des  combinaisons  tr£s  varies.  Nous  avons  vu  des 

\ 

villes  recourir  au  remboursement  au  pair  d’anciennes  dettes  et 
a  des  emprunts  plus  avantageux  pour  alldger  leurs  charges, 
les  unes  s’adressant  au  public,  les  autres  s’assurant  Tappui  de 
syndicats,  d’autres  enfin  traitant,  sans  autre  intermediate, 
avec  le  Credit  Foncier  de  France  qui  leur  garantissait  un 
taux  maximum  les  capitaux  dont  elle  avaient  besoin  pour 
rembourser  la  dette  ant^rieure  contracts  a  un  taux  plus  eiev£. 

Nous  avons  vu  enfin,  plus  pr£s  de  nous  encore,  le  Credit 
Foncier  de  France  profiter,  pour  son  propre  compte,  et  au 

1  Voir  notre  £tude  :  La  Conversion  de  la  Rente  6%.  Paris,  Dentu,  edit.,  1870. 


458 


ECONOMIC  HISTORY. 


grand  profit  de  sa  vaste  clientele  d’emprunteurs,  de  l’abaisse- 
ment  du  prix  de  l’argent,  et  convertir  des  obligations  entrai- 
nant  une  annuity  61evde  par  des  titres  n’exigeant  qu’une 
annuity  notablement  inferieure.  On  sait  avec  quelle  simpli¬ 
city  s’est  effectuee  cette  operation :  les  porteurs  des  obliga¬ 
tions  a  convertir  avaient  un  droit  de  preference  dans  la 
souscription  des  obligations  nouvelles  ;  ils  restaient  libres  de 
n’en  pas  user,  mais  etaient  dument  avertis  du  remboursement 
prochain  et  obligatoire  des  titres  anciens. 

Ainsi  les  nations  qui  nous  entourent  et,  chez  nous-memes, 
les  provinces,  les  villes,  les  institutions  de  credit,  out  pratique 
avec  empressement  et  avec  succes,  sous  les  formes  les  plus 
diverses,  des  conversions  qui,  toutes,  ont  ete  profitables.  En 
ce  moment  meme,  de  grandes  operations  de  ce  genre  sont  a 
prevoir.  II  n’est  pas  douteux,  en  effet,  que  l’Angleterre  ne  se 
prepare  a  une  nouvelle  conversion  de  ses  Consol  ides  dont  les 
cours  sont  au-dessus  du  pair ;  des  que  l’occasion  sera  propice, 
la  transformation  sera  faite.  En  Italie,  la  conversion  de  la 
rente  5%  est  a  l’ordre  du  jour,  et  il  ne  s’ecoulera  pas  beaucoup 
de  temps  avant  qu’elle  ne  soit  rdalisee.  Deja  le  gouverne- 
ment  a  prepare  un  projet  pour  convertir  plusieurs  dettes 
rachetables  et  off  re  du  4£  a  la  place  du  5%. 

II  est  a  remarquer  que  toutes  ces  conversions  de  rentes,  qui 
ont  diminue  l’intdret  paye  par  les  Etats  a  leurs  preteurs,  n’ont 
nullement  diminue  les  charges  de  ces  divers  pays.  Pour  etre 
juste,  equitable,  toute  conversion  de  rentes  doit  avoir  pour 
consequence  une  diminution  d’impots.  II  n’en  a  rien  ete. 
Prenez  tous  les  budgets  des  pays  qui  ont  effectud  des  conver¬ 
sions  ;  comparez  les  chiffres  des  depenses  publiques  et  des 
impdts  h  ceux  qui  etaient  inscrits  avant  et  apr£s  les  conver¬ 
sions,  vous  trouverez  partout  des  augmentations  de  depenses 
et  d’impdts. 

II  faut  remarquer,  d’autre  part,  que  presque  toutes  ces 
conversions  n’ont  pu  etre  realisees  avec  succes  qu’autant  que 
la  liaute  banque  est  intervenue  et  leur  a  donnd  son  concours. 
II  convient  enfm  de  dire  que  toutes  ces  operations  ont  ete 
facilities  par  l’abondance  toujours  croissante  des  capitaux 


LES  DETTES  PUBLIQUES. 


459 


disponibles,  et  par  la  baisse  du  taux  de  l’int^ret,  consequence 
de  cette  abondance  des  capitaux. 

IV.  — ABAISSEMENT  DU  TAUX  DE  LTNT&RET  DE  L’ ARGENT 

DEPUIS  1870. 

Depuis  1870,  et  surtout  depuis  le  jour  ou,  pour  la  premiere 
fois  depuis  la  guerre,  la  rente  5.%  fut  cote  au  pair,  c’est-a-dire 
a  100,  le  4  septembre,  1874,  des  changements  profonds  se  sont 
produits  sur-  les  marches  frangais  et  etrangers  dans  le  taux  de 
capitalisation.  Successivement,  d’annee  en  annee,  lentement 
d’abord,  puis  par  etapes  vigoureusement  franchies,  les  valeurs 
de  premier  ordre,  de  premiere  surety,  descendirent  de  5% 
d’interet  a  4J%  ;  les  valeurs  de  second  ordre,  qui  rapportaient 
6J,  7,  et  8%,  descendirent  a  5%  et  meme  au-dessous.  A 
mesure  que  le  capital  de  ces  valeurs  augmentait,  leur  revenu 
devenait  naturellement  moins  eieve. 

Au  lendemain  de  la  guerre,  un  capital  de  100,000  place  en 
rentes  5%  aurait  produit  5.500  a  6.000  fr.  de  rentes.  Le 
meme  capital,  plac6  aujourd’hui  en  rentes  frangaises  3%  pro- 
duirait  a  peine  3.700  francs. 

Depuis  1870,  le  6%  Audricain  a  disparu;  converti  d’abord 
en  5%,  puis  en  4%,  le  voila  maintenant  en  3%  en  attendant 
une  nouvelle  conversion  en  2J. 

Le  4J  Beige,  les  fonds  Allemands,  tels  que  les  5%  Badois, 
Bavarois,  Wiirtembergeois,  etc.,  ont,  sur  la  cote,  c6de  la  place 
a  des  titres  de  moindre  rapport,  a  des  rentes  de  3J  et  de  3%, 
qui  atteignent  le  pair. 

Dans  l’Europe  entiere,  les  rentes  4%  qui  ont  £t£  erodes  en 
remplacement  de  rentes  5%  sont  au  pair  et  meme  au-dessus, 
ou  ont  £te  6chang6es  contre  du  ^  ou  du  3%. 

Des  fonds  strangers,  exotiques,  comme  Ton  dit  en  Bourse, 
arrivent  maintenant  au  taux  moyen  auquel  se  n^gociaient 
anciennement  de  bons  credits  europdens  de  second  ordre. 
Les  cotes  anglaises  nous  donnent  a  cet  £gard,  de  curieux 
exemples. 

II  y  a  dix  ans  seulement,  void,  notamment,  le  1%  Japonais 
qui  valait  100  fr.  fin  1876  et  qui  maintenant  vaut  113  ;  a 


460 


ECONOMIC  HISTORY. 


pareille  date,le  6%  Argentin  1868,  cote  aujourd’hui  101  a  102, 
valait  60;  le  5%  Br^silien  valait,  fin  1876,87  a  88 ;  il  est 
maintenant  a  103,  trois  points  au-dessus  du  pair. 

Le  5%  Italien  qui  ne  donne  netque  434,  valait,  fin  1867,  72 
fr.  :  il  etait  dans  ces  derniers  temps  a  102  fr.  et  meme  au- 
dessus,  c’est-a-dire  20  fr.  plus  cher  que  le  prix  auquel  nous 
dmettions  en  1871  notre  rente  frangaise  5%. 

Le  5%  Roumain,  qui  valait  40  fr.  fin  1876,  et  qui  rapportait 
cons^quemment  8c/0,  se  n^gocie  au-dessus  de  90.  On  lvalue 
done  aujourd’hui  le  credit  de  la  Roumanie  a  un  taux  bien 
sup^rieur  a  celui  auquel  notre  propre  credit  etait  estinV  en 
1871  et  1872,  puisque,  dans  ces  deux  ann^es,  la  France 
emettait  ses  rentes  5%  a  82,50  et  84  fr.  50. 

La  rente  Autrichienne  4 cjQ  or,  cotee  89  a  90  fr.  et  qui,  il  y  a 
peu  de  temps,  s’est  negocVe  meme  a  96  et  97  fr.,  est  encore 
plus  haut  que  nos  rentes  frangaises  en  1871.  La  rente  Hon- 
groise  4 ojQ  or,  a  valu  jusqu’a  88  dans  ces  derniers  mois,  alors 
que  nous  avons  6mis  du  5%  frangais  5  et  6  francs  plus  bas. 

Yoici,  pour  les  principaux  fonds  d’Etats,  la  difference  des 
cours  cotes  au  31  ddeembre,  1869,  et  au  31  d4cembre,  1886  :  — 


31  dec.,  1869. 

31  d«5c.,  1886. 

3%  Frarnpais . 

.  .  .  70,05 

82,20 

4,34  Italien . 

.  .  .  67,30 

101,85 

6%  Americain . 

134  (le  4%). 

41  Beige . 

.  .  .  102^ 

95,40  (le  3%). 

5%  Russe  1862  . 

...  85 

96 

3%  Consolides  anglais  .  .  . 

...  92f 

1011 

V.  — MODES  DEMISSION  ET  TYPES  DE  RENTES  EMPLOYES 
PAR  LES  GOUVERNEMENTS  EMPRUNTEURS. 

Nous  venons  de  montrer  comment  les  conversions  de  rentes 
effectives  par  les  principaux  Etats  avaient  6t6  rdalis^es  et 
comment  la  baisse  du  taux  de  l’interet  et  l’abondance  des 
capitaux  avaient  facility  ces  operations.  Il  n’est  pas  sans 
utility  de  faire  remarquer  aussi  comment  les  divers  pays 
effectuent  leurs  emprunts.  On  voit,  d’apres  cette  etude 
comparative  des  dettes  europeennes,  combien  est  varVe  la 
diversite  des  types  de  rentes  emises.  L’Angleterre  a  du  3%, 


LES  DETTES  PUBLIQUES. 


461 


du  2J%,  des  annuity  terminables ;  l’Autriche,  du  4.20%  m£- 
tallique,  du  4%  or,  du  5%  papier,  du  5%  argent,  des  lots  a 
primes  sans  interets.  La  Belgique  a  eu  du  4J,  du  4%,  du  3%. 
La  Russie  a  6mis  des  emprunts  sous  forme  de  rentes  6%,  5%, 
4%  ;  la  Hollande  a  des  rentes  3|,  3%,  2 \oj0  ;  l’ltalie  a  du  5%, 
du  3%,  et  vient  de  d^cr^ter  du  4 \°f0\  la  Norwege  a  du  4J,  du 
4%,  du  3 \°/o  ;  le  Portugal  a  du  5%  et  du  3%  ;  la  Prusse  a  du  4% 
et  du  3 \°J0 ;  laRoumanie  a  du7%,du  6%,du  5%;  la  Saxe,du3J 
etdu3%;  la  Suede,  du  4J%,  du  4%,  du  3J%  ;  le  Wurtemberg, 
du  4J,  du  4%,  du  3J%,  etc.  Parmi  les  fonds  coloniaux,  nous 
trouvons  du  5%  de  la  Nouvelle  Z^lande,  du  5%  Quebec,  du 
6%  Queensland,  du  4J,  4%  et  3J%  des  Indes,  du  4%  du  Canada, 
de  la  Jama'ique,  de  Tasmanie,  du  5%,  4J%,  4%  Victoria. 
Quel  enseignement  tirer  de  ces  faits  ?  C’est  qu’on  ne  peut 
dire  d’une  fagon  absolue,  c’est  qu’il  n’est  pas  scientifiquement 
ni  pratiquement  prouv6  qu’il  soit  preferable  pour  un  Etat  de 
n’emprunter  que  sous  un  meme  type  de  rentes,  et  que  la 
diversity  de  ces  types  de  rentes  peut  nuire  a  leur  plus-value. 
La  verity  est  qu’il  en  est  des  Etats  comme  des  particulars  :  le 
meilleur  mode  d’emprunt  est  celui  qui  coute  le  moins  cher  et 
procure  la  plus  grande  somme  des  capitaux.  II  peut  etre 
utile  d’einprunter  sous  forme  d’obligations  ou  sous  forme  de 
rentes;  en  4%  ou  en  3%  ;  en  5%  ou  en  4J%.  C’est  une 
question  d’opportunit^  et  depreciation.  Tous  les  gouverne- 
ments  ont  choisi  la  forme  d’emprunt  la  plus  avantageuse  aux 
interets  de  tous,  sans  s’astreindre  a  n’emettre  qu’un  type  de 
rentes  determine  a  l’avance. 

II  en  est  de  meme  pour  le  mode  demission  des  emprunts. 
C’est  la  France  qui,  lors  de  la  guerre  de  Crimee,  generalisa  le 
systeme  des  souscriptions  publiques.  Avant  1852  les  em¬ 
prunts  d’Etat  etaient  soumissionnes  par  de  grandes  maisons 
de  banque  qui  plagaient  ensuite  les  titres  de  rentes  dans 
leur  clientele:  plus  tard,  les  gouvernements  firent  appel 
directement  aux  capitaux  du  public  sans  se  servir  de 
l’interm^diaire  des  banquiers.  Cependant,  des  modifications 
s^rieuses  se  sont  produites  dans  le  systeme  des  souscrip¬ 
tions.  Nous  voyons  l’Angleterre  pour  ses  emprunts  coloniaux, 
pour  ses  emprunts  de  villes,  effectuer  des  appels  au  credit 


462 


ECONOMIC  HISTORY. 


sous  forme  d’adjudication  publique.  Elle  offre  4%  d’int^ret, 

par  exemple  ;  elle  s’engage  a  servir  d’abord  les  demandes  de 

ceux  qui  se  contentent  d'un  int^ret  moindre.  Ce  systeme 

favorise  les  souscripteurs  les  moins  exigeants,  ne  ddcourage 

pas  le  public  par  des  m^comptes  imm6rit6s  a  la  repartition  et 

permet  a  l’emprunteur  d’obtenir  les  conditions  les  plus  favor- 

ables ;  ce  genre  de  souscription  rend  les  emprunts  moins 

on^reux  pour  les  emprunteurs.  Les  autres  modes  d’emprunts 

employes  par  les  gouvernements  sont  des  ventes  fermes  ou  h 

option  a  des  banquiers  et  a  des  ^tablissements  de  credit. 
/ 

Plusieurs  Etats  se  sont  bornes  a  charger  des  maisons  de 
banque  d’emettre  les  emprunts  qu’ils  desiraient  effectuer, 
moyennant  une  commission.  A  l’exception  de  l’Angleterre 
et  de  la  France,  presque  tous  les  gouvernements  europ^ens 
traitent  encore  avec  des  syndicats  de  banquiers  pour  leurs 
Emissions. 


VI.  — DE  LA  REPARTITION  DES  FONDS  PUBLICS  ETRANGERS 
DANS  LES  PORTEFEUILLES  FRANQAIS. 

Dans  le  cours  de  cette  dtude,  nous  avons  essayd  de  connaitre 
le  montant  approximate  des  valeurs  dtrangeres  appartenant 
a  nos  nationaux.  Les  chiffres  que  nous  avons  cites  nous 
ont  dt4  donnas  par  les  ministres  des  finances  et  les  directeurs 
de  statistique  des  gouvernements  strangers ;  mais  ils  auraient 
besoin  d’etre  completes,  et  aucune  autorite  ne  pourrait  mieux 
que  notre  conseil  sup^rieur  de  statistique  obtenir  et  grouper 
des  indications  plus  nombreuses  sur  ce  sujet  important. 

A  de  rares  exceptions  pres,  et  sauf  des  circonstances  particu- 
lieres  telles  que  la  hausse  ou  la  baisse  du  prix  du  change  sur 
des  valeurs  internationales,  les  capitalistes  frangais  qui  pos- 
skdent  des  valeurs  Strange  res  ne  font  pas  recevoir  le  montant 
de  leurs  coupons  d’int^ret  a  l’4tranger :  ils  s’adressent  &  des 
banquiers  et  des  dtablissements  de  credit  frangais,  pour 
encaisser  leurs  coupons  dchus. 

Nous  sommes  convaincus  que  MM.  de  Rothschild,  la  Banque 
de  Paris,  la  Socidt£  Gdndrale,  le  Comptoir  d’Escompte,  le 
Credit  Lyonnais,  le  Crddit  industriel  et  tous  les  banquiers  — 


LES  DETTES  PUBLICITIES. 


468 


qui  paient  une  patente  speciale  comme  effectuant  des  paie- 
ments  de  coupons  strangers,  —  repondraient  sans  difficultes  a 
un  questionnaire  que  le  Conseil  superieur  de  statistique  leur 
adresserait. 

Ce  n’est  pas  par  simple  curiosite  que  des  documents 
semblables  auraient  besoin  d’etre  mis  au  jour.  Les  questions 
financi&res  et  fiscales  doivent,  plus  que  jamais,  prendre  le  pas 
sur  les  questions  politiques.  Or,  ce  que  nos  legislateurs  et  la 
plupart  de  nos  homines  politiques  connaissent  le  moins,  c’est 
l’exacte  situation  de  la  fortune  publique  de  la  France,  le 
montant  et  la  puissance  de  son  epargne,  la  nature  et  le  chiffre 
de  ses  placements  soit  sur  des  valeurs  fran^aises,  soit  sur  des 
valeurs  etrangeres.  C’est  a  ce  defaut  de  connaissances  qu’il 
faut  attribuer,  pour  beaucoup,  les  erreurs  fiscales  economiques 
et  financieres  qui  ont  £te  commises  dans  l’etablissement, 
1’ augmentation  et  la  suppression  de  tel  ou  tel  impot  de 
preference  a  tel  ou  tel  autre.  A  une  epoque  ou  il  est  ques¬ 
tion  d’impfit  sur  les  rentes,  d’impbt  sur  les  valeurs  etrangeres 
appartenant  a  des  Fran^ais,  d’imp6t  sur  le  revenu,  etc.,  ces 
renseignements  sont  indispensables  si  l’on  veut  eviter  de  dan- 
gereuses  erreurs.  Le  Conseil  superieur  ne  doit  pas  liesiter,  a 
notre  avis,  a  faire  la  lumiere  sur  ces  questions  speciales  :  c’est 
du  c6te  des  statistiques  financieres,  nous  ne  saurions  trop  in¬ 
sister  sur  ce  point,  que  doivent  porter  les  efforts  et  les  travaux 
des  hommes  eminents  qui  font  partie  de  la  Commission. 

VII.  — DE  LA  COTE  ET  DE  LA  NfiGOCIATION  DES  RENTES 
ERANgAISES  AUX  BOURSES  ETRANGERES. 

Nous  devons  aussi  signaler  une  r£forme  que  nous  avons 
bien  souvent  reclamee  et  qui  paraitra  sans  doute  utile  a 
obtenir  quand  on  se  sera  rendu  compte  de  l’importance  des 
emprunts  Strangers  contractes  en  France.  A  l’exception  des 
fonds  allemands,  tous  les  fonds  d’Etat  etrangers,  toutes  les 
principales  valeurs  etrangeres  sont  cotes  a  notre  bourse ;  tous 
les  gouvernements  dtrangers  ont  fait  appel  aux  capitaux  fran- 
^ais.  Or,  aucune  de  nos  rentes  fran§aises  n’est  cotee  ni  a  Vi¬ 
enne,  ni  a  Saint-Petersbourg,  ni  ^  Stockolm,  ni  a  Christiania, 


464 


ECONOMIC  HISTORY. 


ni  a  Rome,  ni  a  Florence,  ni  a  Madrid,  ni  a  Lisbonne,  ni  a  Ath- 
enes.  Notre  2>°/0  est  cote  a  Londres,  Bruxelles, et  Amsterdam. 
Et  e’est  tout.  Cette  situation  merite  qu’on  y  porte  attention. 

L’affluence  des  fonds  d’Etat  etrangers  sur  le  marchd 
frangais,  la  facility  avec  laquelle  ils  s’y  placent  et  s’y  nego- 
cient,  sont  des  faits  financiers  qui  r^velent  une  tendance  des 
capitaux  contre  laquelle  il  serait  peut-etre  a  la  fois  tr&s 
difficile  de  tenter  une  reaction  soudaine  et  violente. 

II  est  certainement  regrettable  que  nos  nationaux  deviennent 
les  creanciers  d’Etats  dont  la  solvability  et  le  credit  sont 
douteux.  II  est  non  moins  facheux  qu’aux  capitaux  lente- 
ment  formes  par  les  hommes  d’^pargne  de  notre  pays  se  sub¬ 
stituent  des  titres  etrangers  depourvus  de  garantie  sdrieuse. 

Mais,  d’autre  part,  il  ne  saurait  etre  mauvais  et  il  est  meme 
nycessaire  et  utile,  au  point  de  vue  financier  et  yconomique, 
que  les  nations  honnetes  et  notoirement  solvables  soient 
dybitrices  de  la  notre.  Il  ne  saurait  etre  mauvais  qu’a  un 
moment  donny  il  y  ait  entre  les  mains  des  capitalistes  frangais 
une  certaine  quantity  de  bon  papier  etranger,  bien  et  duinent 
garanti,  et  facilement  ryalisable. 

On  congoit  cependant  qu’il  y  a  un  certain  yquilibre  financier 
international  que  ne  saurait  etre  rompu  sans  inconvynient.  On 
congoit  le  peril  qu’il  y  aurait  pour  la  France  a  ne  compter  au 
dehors  que  des  dybiteurs  et  point  de  cryanciers,  a  toujours 
absorber  le  papier  et  ne  jamais  en  cyder,  a  se  saturer  de 
valeurs  etrangeres  tandis  qu’elle  ne  placerait  point  dans  les 
autres  pays  une  quantity  a  peu  pres  yquivalente  de  valeurs 
frangaises.  On  peut  enfin  mesurer  le  danger  que  notre  pays 
pourrait  courir  le  jour  ou  les  nations  qui  nous  entourent 
gagneraient  plus  a  notre  ruine  qu’a  notre  prospy rity.  Meme 
au  point  de  vue  politique,  ces  considyrations  ne  sont  pas  sans 
consistance. 

Politiquement,  aussi  bien  que  financierement,  il  est  done 
sage  et  dysirable  d’intyresser  l’Europe  a  nos  progres,  a  notre 
dyveloppement  national,  a  notre  avenir  yconomique. 

Un  des  moyens  les  plus  efficaces  d’atteindre  ce  but  est  de 
placer  parmi  les  capitalistes  ytrangers  la  plus  grande  quantity 
possible  de  rentes  et  de  valeurs  frangaises. 


LES  DETTES  PUBLTQUES. 


465 


Mais,  dira-t-on,  cette  expansion  des  titres  frangais  s’operera 
naturellement,  grace  a  la  confiance  si  grande  que  le  credit  de 
la  France  inspire  aux  autres  peuples.  Si  bien  qu’il  n’y  aurait 
qu’a  laisser  faire  au  temps,  aux  capitaux  strangers  et  a  la 
sagesse  des  nations  pour  assurer  un  resultat  si  souliaitable 
pour  notre  avenir. 

Ce  raisonnement  est  d’une  logique  excellente,  et  peut  pa- 
raitre  tr£s  solidement  fonde  en  thdorie.  II  est  absolument 
vain,  s’il  n’est  pas  justify  par  la  pratique.  Or,  il  ne  Test 
malheureusement  pas. 

Ce  n’est  pas  tout  de  dire  aux  autres  nations  :  “  Moi,  France, 
j’&nets  de  la  rente,  offrant  toutes  garanties,  pleine  securite. 
Prenez-la ;  il  n’y  a  rien  de  meilleur.  Yous  connaissez  ma 
richesse,  ma  puissance  de  production,  mon  amour  du  travail, 
ma  probity  reconnue.  Yous  savez  que  j’ai  toujours  pay£  et 
bien  pay£ ;  vous  savez  combien,  meme  dans  les  circonstances 
les  plus  critiques,  j’ai  ponctuelle  a  remplir  mes  engage¬ 
ments.  Prenez  de  ma  rente  !  Quels  meilleurs  titres  avez- 
vous  chez  vous  ?  Quels  meilleurs  placements  ?  Quel  emploi 
plus  productif  et  plus  sur  ?  ” 

Un  tel  discours  n’aurait  rien  que  de  juste  et  d’exact.  Tout 
le  monde  est  p£n6tr4  de  ces  v6rit6s  et  nous  n’aurions  h  pr6cher 
que  des  convertis. 

Mais,  pour  que  l’dtranger  prenne  beaucoup  de  nos  fonds 
d’Etat,  encore  faut-il  qu’il  sache  ou  aller  les  prendre,  ou  aller 
les  acheter,  et  meme  ou  aller  les  vendre,  le  besoin  ech&mt.  Il 
faut  les  rendre  accessibles  a  tous  les  capitalistes  de  l’Europe, 
et  n^gociables  facilement  partout. 

Or,  c’est  ce  dont  on  ne  nous  parait  pas  s’etre  suffisamment 
occupy. 

Comme  nous  l’avons  dit  plus  haut,  nos  rentes  frangaises  ne 
sont  pas  cot4es  aux  bourses  etrangeres.  Dans  ces  derni&res 
ann6es,  de  grands  emprunts  ont  4t4  effectues  chez  nous  notam- 
ment  en  rente  3%  amortissable.  On  peut  dire  qu’a  l’heure 
oh  nous  sommes,  cette  rente  est  presque  inconnue  sur  les 
grandes  places  financi^res  de  l’Europe.  Il  y  a  lh  une  faute 
commise,  une  grave  negligence  qu’il  faut  se  hater  de  rdparer. 
On  doit  faire  pour  nos  rentes  ce  que  les  autres  nations  font 

30 


466 


ECONOMIC  HISTORY. 


pour  leurs  fonds  d’Etat  qu’elles  prennent  tant  de  soin  de  nous 
faire  connaitre  et  auquels  elles  ouvrent  acces  sur  tous  les 
grands  marches  europeens. 

VIII.  — GUERRE,  RUINE,  OU  REVOLUTION  INDUSTRIE LLE  ET 

Economique. 

Mais  ce  qui,  a  notre  avis,  ressort  jusqu’a  l’^vidence  du  tra¬ 
vail  auquel  nous  nous  sommes  livr^s,  c’est  que  1’ Europe 
entiere,  avec  le  poids  de  ses  depenses  militaires,  avec  la  sur¬ 
charge  des  dettes  publiques  et  d’imp6ts  qui  l’dcrasent,  marclie, 
si  elle  persevere  dans  cette  voie,  a  la  guerre,  a  la  mine,  a  une 
veritable  revolution  industrielle  et  economique.  Quel  que 
soit  le  pessimisme  d’une  telle  conclusion,  nous  ne  pouvons 
taire  nos  impressions.  La  paix  de  l’Europe  n’est,  a  vrai  dire, 
qu’un  etat  de  guerre  latent,  et  cette  situation  qui  semble  la 
condition  ordinaire  du  vieux  continent  p£se  de  deux  manieres 
sur  le  monde  civilise :  elle  lui  enl&ve,  d’une  part,  une  bonne 
partie  des  capitaux  constitues  par  l’epargne  annuelle,  par  le 
travail  de  tous,  pour  entretenir  des  soldats,  acheter  des  fusils, 
des  canons,  des  munitions,  construire  des  forteresses,  des 
navires  ;  d’autre  part,  elle  l’empeche  de  se  servir  de  ces  capi¬ 
taux  enormes  pour  developper  le  commerce,  l’industrie,  le 
materiel  de  la  production,  diminuer  les  frais  generaux  de  la 
nation.  L’apprehension  et  les  preparatifs  de  guerre  deviennent 
aussi  nuisibles  et  aussi  couteux  que  la  guerre  elle-meme.  Les 
finances  de  l’Europe  sont  tellement  oberees  qu’on  peut  craindre 
qu’elles  ne  conduisent  fatalement  les  gouvernements  a  se  de- 
mander  si  la  guerre,  avec  ses  eventualites  terribles,  ne  doit 
pas  etre  prdfdr^e  au  maintien  d’une  paix  prdcaire  et  couteuse. 
Si  ce  n’est  point  a  la  guerre  que  doivent  aboutir  les  prdpara- 
tifs  militaires  et  les  armements  de  l’Europe,  ce  pourrait  bien 
etre,  ainsi  que  le  disait,  il  y  a  vingt  ans,  lord  Stanley,  a  “  la 
hanqueroute  des  Etats.”  Si  ce  n’est  ni  &  la  guerre  ni  &  la 
mine  que  doivent  conduire  de  semblables  folies,  c’est  assur6- 
ment  a  une  revolution  industrielle  et  dconomique. 

La  vieille  Europe  lutte  contre  la  concurrence  de  pays  jeunes, 
riches,  produisant  a  meilleur  compte.  II  est,  au-delil  de 


LES  DETTES  PUBLIQUES. 


467 


l’Oc^an,  une  republique  puissante,  l’Amdrique,  qui  a  su 
dteindre  une  dette  que  les  ndcessites  d’une  grande  cause  lui 
avaient  fait  contracter  ;  elle  offre  au  monde  entier  le  spectacle 
d’une  prospdrit6  sans  exemple.  Tout  r^cemment,  le  message 
du  president  Cleveland  a  l’ouverture  du  CongrSs  a  traduit  le 
sentiment  d’un  veritable  embarras  de  richesses.  En  Asie, 
tous  les  peuples  commencent  a  proliter  des  decouvertes  et  des 
progres  que  l’Europe  a  accomplis,  et  comme  dans  ces  pays  le 
prix  de  la  main-d’oeuvre  et  les  charges  publiques  sont  presque 
nuls,  l’Europe  entire  6prouvera  chaque  annee,  de  plus  en 
plus,  les  effets  de  l’apparition  sur  la  scene  commerciale  et 
industrielle,  de  tous  ces  peuples  qui  n’ont  pas  a  payer,  tous  les 
ans,  ni  quatre  milliards  et  demi  pour  les  d^penses  de  la  guerre, 
ni  plus  de  cinq  milliards  pour  les  interets  de  leurs  dettes 
publiques. 

Le  marechal  de  Moltke  disait  recemment  au  Reichstag 
“  qu’a  la  longue  les  peuples  ne  pourront  plus  supporter  les 
charges  militaires.”  II  aurait  pu  ajouter  que  le  jour  ou  les 
peuples  se  rendront  compte  de  tout  ce  que  leur  coute  la  guerre, 
me  me  lorsqu’elle  demeure  a  l’6tat  de  simple  risque,  lorsqu’ils 
consid^reront  la  masse  croissante  d’interets  que  le  progres 
jette  chaque  jour  du  cdt6  de  la  paix,  les  gouvernes  sauront  ce 
jour-la  dieter  leurs  volont^s  a  leurs  gouvernants.  Les  41 
milliards  d’augmentation  des  dettes  publiques  de  1’Europe, 
depuis  1870,  mis  en  regard  des  milliards  de  diminution  de  la 
dette  de  l’Am^rique  offrent  un  puissant  enseignement.  Non, 
les  peuples  ne  pourront  plus  a  la  longue  supporter  de  tels 
fardeaux  ;  non,  ils  ne  pourront  plus  continuer  a  travailler,  a 
peiner,  a  souffrir,  a  elever  pdniblement  leurs  families  pour 
que  leurs  biens,  leurs  ressources,  leurs  ^pargnes,  les  etres  qui 
leurs  sont  chers,  soient  sacrifids  et  detruits  par  la  guerre  dans 
des  luttes  gigantesques.  Ils  veulent  la  paix,  profiter  des 
bienfaits  qu’elle  procure,  dchanger  paisiblement  leurs  produits, 
commercer,  travailler ;  ils  veulent  tous  une  administration 
6conome,  des  diminutions  d’impdts. 

A  ces  ddsirs,  les  gouvernements  r^pondent  en  augmentant 
tous  les  ans  les  charges  militaires,  les  prdparatifs  de  guerre, 
les  charges  publiques. 


468 


ECONOMIC  HISTORY. 


Les  peuples  finiront  par  se  lasser  du  maintien  d’un  tel  dtat 
de  clioses  qui  nous  ramene  aux  temps  barbares :  la  civilisation 
qui  a  abattu  les  barrieres  entre  les  pays  et  les  individus,  rendu 
les  comunications  plus  rapides  et  plus  faciles,  dtabli  des 
cbemins  de  fer  et  des  routes,  creus6  des  canaux,  perc6  des 
montagnes  et  des  isthmes,  imposera  la  paix  aux  socidtds 
modernes  d’une  fagon  aussi  irresistible  que  la  guerre  s’im- 
posait  aux  sauvages  et  aux  society  anciennes.  —  Janvier , 
1887. 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


469 


XVII. 

THE  WORLD’S  PROGRESS  IN  TRADE  AND 

INDUSTRY. 

From  Neumann-Spallart’s  “  Uebersichten  der  Weltwirth- 

SCHAFT,”1  TRANSLATED2  IN  THE  “JOURNAL  OF  THE  STATISTICAL 

Society,”  Vol.  XLV.  pp.  82-114. 

THE  latter  part  of  the  present  century  has  witnessed 
many  changes  in  the  economic  and  industrial  condi¬ 
tions  of  the  majority  of  the  civilized  countries  of  the  world. 
Industries,  arts,  and  manufactures  have  acquired  a  remark¬ 
able  development ;  the  more  striking  when  we  consider  how 
rapidly  the  change  has  been  effected.  The  progress  made  by 
individual  States  is  easily  traced  by  their  degree  of  refinement 
and  a  study  of  their  statistics ;  and  from  these  it  will  be  seen 
how  quickly  this  transformation  advances.  Little  less  than 
a  century  ago  the  industries  of  certain  countries  and  States 
were  isolated  and  estranged ;  at  the  present  time  they  are  to 
a  great  extent  united.  It  is  not  so  long  since  that  burden¬ 
some  restraints  were  placed  upon  internal  intercourse  by 
reason  of  monopolies  which  were  in  the  hands  of  guilds  and 
corporations.  In  addition  to  this,  staple  rights  and  traffic 
rights,  privileges  which  were  granted  to  certain  townships, 
had  also  the  effect  of  restricting  the  progress  of  national, 
and  in  a  far  greater  degree  of  individual,  industries  and 
trades.  In  some  of  the  central  European  countries  this  state 
of  affairs  continued  until  very  recently,  and  even  when  the 
horizon  gradually  began  tq  widen  among  some  of  the  more 
enlightened  nations,  this  isolation  still  continued,  though 
within  extended  boundaries.  It  was,  however,  not  so  much 

1  Jahrgang,  1880,  Stuttgart.  Julius  Maier,  1881. 

2  The  edition  of  the  “  Uebersichten  ”  for  1887  has  necessitated  a  number 
of  clianges  in  this  translation.  — B.  R. 


470 


ECONOMIC  HISTORY. 


an  isolation  of  town  from  town  as  province  from  province, 
and  many  European  countries  formed  the  type  of  a  narrow 
minded  policy  of  seclusion  in  their  economic  life.  It  was 
only  during  the  decade  from  1870  to  1880  that  those  admin¬ 
istrative  reforms  were  introduced  which  had  the  effect  of 
causing  the  whole  State  to  be  recognized  as  a  unit  in  respect 
of  economic  questions  affecting  the  entire  population.  Soon 
after  this  important  epoch  in  the  history  of  economic  pro¬ 
gress,  people  became  more  sensible  of  the  pressing  need  that 
existed  of  freeing  commerce  throughout  the  land  from  the 
burdensome  restraints  which  had  hitherto  fettered  it.  As 
soon  as  the  political  horizon  began  to  clear,  the  German  States 
banded  together  and  formed  the  Zollverein.  Great  Britain 
then  proceeded  to  abolish  protective  tariffs ;  the  continental 
States  also,  after  a  little  time,  reduced  the  existing  high 
duties,  repealed  the  guild  and  corporation  laws,  which  until 
then  had  so  paralyzed  trade,  and  endeavored  to  enter  into  a 
species  of  political  trades  union  with  each  other.  It  was 
not  long  before  the  European  Governments,  following  the 
example  set  them  by  England  and  France  in  1860,  concluded 
a  series  of  international  commercial  treaties,  by  which  they 
reciprocally  guaranteed  to  each  other  “  most  favored  ”  treat¬ 
ment  ;  and  the  subsequent  modifications  of  the  treaties  thus 
contracted  in  the  period  1860-68  were  generally  in  a  favor¬ 
able  direction,  and  tended  to  minimize  the  domain  of  cus¬ 
toms’  exclusion. 

After  the  expiration  of  the  treaty-period  in  1877  we  enter 
again  upon  a  time  of  economic  retrogression.  The  treaties 
during  later  years  were  not  collectively  renewed,  and  although 
in  some  cases  the  duties  had  been  raised,  yet  there  was  no 
actual  return  to  the  old  system  of  restrictive  and  prohibitive 
tariffs.  The  force  of  circumstances  imperatively  demands  that 
commercial  relations  should  remain  undisturbed,  and  not  suf¬ 
fer  from  restraints  placed  upon  free  importation  into  the  re¬ 
spective  countries.  In  connection  with  the  close  economic 
combinations  of  all  civilized  nations,  there  has  in  our  time 
been  an  increasing  effort  to  attain  a  similarity  of  conditions 
with  reference  to  industry,  justice,  and  administration.  The 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


471 


unity  of  the  most  complex  State  relationships  depends  on  the 
contents  of  numerous  economic  treaties.  At  first  in  Germany, 
and  afterward  in  certain  other  European  States,  railroad  or¬ 
ganizations  were  formed.  By  means  of  these  enterprises 
goods  and  personal  property  were  transported  throughout  the 
whole  length  and  breadth  of  the  land.  Even  in  a  far  greater 
degree  than  railways,  have  the  postal  and  telegraphic  systems 
been  the  means  of  uniting  not  only  the  State  but  the  entire 
world,  and  of  making  people  of  all  nations  neighbors  in  spite 
of  distance.  The  world’s  postal  union,  which  extends  nearly 
1,300,000  square  miles,  and  unites  approximately  760  mil¬ 
lions  of  people,  is  one  of  the  happiest  results  of  the  develop¬ 
ment  of  commercial  industries.  In  the  same  way,  in  1865, 
the  first  steps  were  taken  to  establish  an  international  tele¬ 
graphic  union,  and  the  results  in  1880  went  far  to  prove  that 
this  union  had  been  the  means  of  breaking  down  the  barriers 
of  international  commercial  intercourse.  Railway  con¬ 
gresses,  assemblies  of  a  thoroughly  cosmopolitan  character, 
the  postal  congress,  and  the  international  telegraphic  confer¬ 
ence, —  all  enjoying  official  authority, —  have  been  the  means 
of  extending  still  further  commercial  relations.  What  they 
accomplish  in  the  region  of  intellectual  and  material  culture 
is  recorded  in  golden  characters  in  the  history  of  the  world. 
They  have  proved,  in  a  far  greater  degree  than  was  antici¬ 
pated,  the  means  of  promoting  still  further  advancement  in 
the  economic  conditions  of  the  world.  To  them  we  owe  the 
unity  of  the  weights  and  measures  on  the  basis  of  the  metri¬ 
cal  system,  the  international  system  of  goods  transportation, 
and  the  adoption  by  entire  groups  of  States  of  the  same 
monetary  standard,  of  which  we  have  an  example,  first,  in 
the  Austro-German  monetary  conference,  then  in  the  con¬ 
ference  of  1865,  known  as  the  Great  Latin  Conference,  and 
lastly  in  the  Scandinavian  monetary  union.  The  adoption 
of  a  complete  international  system  of  weights  and  measures 
is  a  question  the  settlement  of  which  cannot  be  long  de¬ 
ferred;  the  only  point  upon  which  controversy  is  likely  to 
arise  is  the  settlement  of  the  basis  which  is  to  be  taken. 

There  has  already  been  established  a  similarity  in  the  inter- 


472 


ECONOMIC  HISTORY. 


national  laws  of  banking  and  exchange.  This  has  been  the 
means  of  affording  greater  security  for  the  protection  of  in¬ 
ternational  rights,  and  given  also  an  impetus  to  the  distri¬ 
bution  of  capital.  As  may  be  easily  credited,  at  no  period 
of  the  world’s  history  has  there  been  a  time  when  the  rapid 
circulation  of  capital  between  one  nation  and  another  has 
been  more  easily  and  expeditiously  effected  than  at  present. 
The  movement  of  milliards  now  occasions  no  surprise,  and  it 
is  perfectly  consistent  that  in  the  case  of  English  or  French 
capital  which  circulates  in  Austria,  Germany,  Russia, 
Egypt,  or  in  South  America,  or  Asiatic  countries,  any  ex¬ 
cess  or  deficiency  may  be  provided  for  by  credit  drawn  on 
Europe,  in  America,  or  India.  Thus  in  the  same  way  all 
commercial  enterprises  combine  to  assist  in  the  development 
of  cosmopolitan  economy, —  railways,  posts,  and  telegraphs 
being  the  outward  sign  of  this  union.  With  these  goes  hand 
in  hand  the  division  of  labor  which  conveys  the  production 
of  the  masses  to  its  proper  place  in  the  world.  With  the 
ever-increasing  masses,  the  necessity  of  the  world’s  produc¬ 
tion  being  considerablv  extended  becomes  a  matter  of  the 
first  importance,  and  there  are  now  no  barriers  sufficiently 
strong  to  resist  this  universal  demand.  Administrative  in¬ 
stitutions  must  be  so  adapted  that  this  century’s  legislation 
may  be  fixed  on  a  firm  and  lasting  basis. 

International  relations  have  had  the  effect  of  creating  a  new 
order  of  life,  in  which  the  industries  of  individual  States, 
without  detriment  to  their  independence  or  individuality, 
must  perform  their  share  of  the  functions  of  the  whole,  of 
which  they  constitute  a  unit.  The  part  then  which  in  the 
world’s  economy  is  taken  by  individual  States  is  of  the 
greatest  value ;  and  though  the  present  economic  conditions 
of  the  world  are  not  yet  fully  developed,  they  are  sufficiently 
advanced  to  enable  us  to  form  an  idea  of  their  ultimate  im¬ 
portance.  Wonderful  progress  has  been  already  made,  and 
even  if  it  be  found  that  the  improvements  which  have  so  far 
manifested  themselves  in  these  economic  conditions  will  not 
be  further  advanced  by  the  present  generation,  still  there  can 
be  no  question  as  to  the  excellent  results  of  which  they  have 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


473 


already  been  productive.  In  all  parts  of  the  civilized  world 
the  growth  of  capital  has  made  rapid  progress,  and  even 
during  the  commercial  crisis  of  1873,  and  the  consequent 
depression,  this  progress,  though  certainly  interrupted,  was 
not  wholly  checked.  It  again  received  a  powerful  impulse 
in  1 880-82,  and  has  by  no  means  come  to  a  standstill  in  the 
relatively  unfavorable  years  1883-85.  Adequate  employment 
for  these  accumulated  millions  has  been  possible  in  large 
economic  undertakings.  Thus,  for  instance,  when  sufficient 
profit  was  not  obtainable  in  Europe  by  reason  of  a  fall  in  the 
rates  of  interest,  capital  was  diverted  into  other  channels, 
and  employed  in  foreign  investments  in  far  distant  countries, 
which,  though  remote,  yet  offer  a  fair  field  for  investment. 
In  this  manner  inventions  and  enterprise  have  been  univer¬ 
sally  stimulated. 

All  these  considerations  lead  us  confidently  to  predict  that 
though  there  may  be  interruptions  and  checks  to  the  ever 
increasing  progress  in  the  improvements  (5f  the  world’s 
economic  conditions,  these  interruptions  are  of  a  purely 
temporary  character,  and  must  eventually  be  overcome.  In¬ 
dustries  and  commerce  which  have  advanced  with  such  rapid 
strides,  and  the  vast  amount  of  labor  and  capital  which  have 
been  expended  upon  railroads,  shipping,  telegraphs,  etc., 
have  all  given  an  impetus  to  the  world’s  progress,  and  can¬ 
not  fail  to  make  a  lasting  impression  upon  it. 

In  order  thoroughly  to  appreciate  the  changes  which  the 
world’s  economic  conditions  have  experienced  under  the  dif¬ 
ferent  natural  political  and  social  influences,  as  well  as  to 
estimate  the  reaction  caused  by  crises,  or  periods  of  specu¬ 
lation,  favorable  or  unfavorable  harvests,  wars,  or  revolu¬ 
tions,  protection  or  free  trade,  and  other  important  factors  in 
determining  the  national  prosperity,  it  will  be  necessary  to 
arrange  a  broad  and  comprehensive  system  of  statistics  ex¬ 
tending  over  a  lengthened  period.  We  have  to  deal  with 
such  a  mass  of  complex  individual  elements,  that  only  the 
consideration  of  the  most  important  will  lead  us  to  any  logi¬ 
cal  deduction.  Social  economy,  commercial  policy,  finance, 
changes  of  administration,  as  also  the  specific  influences  of 


474 


ECONOMIC  HISTORY. 


good  or  bad  years,  must  be  taken  into  account.  In  the  in¬ 
vestigation  of  a  subject  so  complicated  as  the  present,  we 
must  be  satisfied  with  very  crude  information,  and  as  it  is  im¬ 
possible  to  obtain  accurate  and  reliable  data,  we  are  obliged 
to  depend  in  a  very  great  measure  upon  inference  and  deduc¬ 
tion.  As  a  means  of  approximately  estimating  the  extent  of 
increase  or  decrease  in  material  prosperity,  it  is  advisable  to 
take  as  a  basis  for  the  calculation,  the  income-tax  returns, 
affording  as  they  do  a  certain  indication  of  the  position  of 
national  wealth. 

Among  the  nations  which  have  contributed  so  enormously  to 
increase  the  world’s  prosperity,  Great  Britain  takes  the  fore¬ 
most  place,  the  growth  of  her  national  capital  having  since  the 
commencement  of  the  present  century  made  very  rapid  strides. 
A  reference  to  the  income-tax  returns  will  show  how  great 
this  annual  increase  has  been.  Mr.  Dudley  Baxter  gives  the 
income  for  the  year  1814-15  as  146  millions  sterling  (accord¬ 
ing  to  the  income-tax  assessments) ;  in  1843  it  amounted  to 
251  millions,  while  in  1865  it  rose  to  396  millions,  and  in 
1875  to  571  millions;  and  according  to  the  estimates  formed 
by  one  of  the  most  distinguished  statisticians,  Mr.  Robert 
Giffen,  the  national  wealth  of  Great  Britain,  which  in  1865 
amounted  to  6,113  millions,  rose  in  1875  to  8,548  millions; 
thus  exhibiting  for  the  decennial  period  an  increase  of  2,435 
million  sterling.  Latterly,  on  account  of  the  general  depres¬ 
sion  which  has  prevailed,  the  annual  increase  of  wealth  is 
estimated  only  at  90  millions.  Thus  the  progress  for  the  en¬ 
tire  period  may  be  presented  in  the  following  statements :  — 


Years. 

Authority. 

National  Wealth. 

1800  .... 

Beck  and  Pulteney . 

£1,800,000,000 

1840  .... 

Porter . 

4,000,000,000 

1800  .... 

Leone  Levi  . 

6,000,000,000 

1875  .... 

Giffen . 

8,550,000,000 

1880  .... 

about  9,000,000,000 

And  it  will  be  readily  conceded  that  the  latter  figures  are 
rather  under  than  over  estimated,  when  we  consider  the  fact 
that  the  amount  of  British  capital  invested  in  Government 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


475 


securities  and  different  companies,  in  railway  and  other  in¬ 
dustrial  enterprises,  is  estimated  by  Mr.  Giffen,  in  his  paper 
on  the  accumulation  of  capital  in  the  United  Kingdom,  at 
2,788  millions,  and  by  the  “Banker’s  Magazine”  (March, 
1881)  at  3,465  millions.  According  to  the  income-tax  re¬ 
turns,  the  exempted  incomes  in  1845  were  at  the  rate  of  £7, 
in  1855  £11,  and  in  1875  £17  per  head.  According  to  the 
most  recent  calculations  (1884),  however,  the  amount  is  esti¬ 
mated  at  about  £36  per  head  of  the  community.  These 
figures  will  show  at  what  an  extraordinary  rate  the  wealth 
of  the  country  is  increasing,  and  we  may  repeat  that  the 
estimates  are  rather  below  than  above  the  mark. 

As  regards  the  progress  of  the  national  wealth  in  France, 
it  appears  from  the  examination  of  the  data  that  the  accumu¬ 
lation  of  capital  has  increased  in  the  period  1848-71  from 
50  to  60  per  cent.  M.  L.  Wolowski  estimated  the  national 
wealth  in  1871  at  150  to  200  milliards  of  francs,  of  which 
120  milliards  consisted  of  property  in  land  and  houses,  so 
that  this  latter  description  of  property  has  absorbed  since 
1851  about  20  milliards,  or  yearly  one  milliard  of  francs. 
This  view  of  the  national  prosperity  of  France  has  also  been 
taken  by  M.  de  Foville,  after  a  critical  examination  of  the 
estimates  formed  by  M.  Block,  S.  Mony,  A.  Amelin,  Yacher, 
and  other  well-known  writers.  He  estimates  the  national 
wealth,  after  the  loss  of  Alsace  and  Lorraine,  at  from  200 
to  216  milliards  of  francs;  these  estimates  are  also  forti¬ 
fied  by  the  authority  of  Fehler,  who  agrees  in  the  main  with 
De  Foville  as  regards  the  increase  in  the  accumulation  of 
wealth,  which  may  be  estimated  at  1,500  millions  of  francs 
yearly. 

There  are  so  many  insurmountable  difficulties  in  the  way 
of  approximately  estimating  the  increase  in  the  national 
wealth  of  Germany,  that  a  comparative  statement  is  almost 
out  of  the  question.  The  many  political,  administrative,  and 
territorial  changes  which  of  late  years  have  taken  place,  ren¬ 
der  it  almost  impossible  to  produce  a  comparison  between 
its  present  position  and  that  of  earlier  years ;  an  idea,  how¬ 
ever,  may  be  formed  of  the  great  progress  made  by  this  nation 


476 


ECONOMIC  HISTORY. 


\ 


by  a  study  of  the  value  of  the  exports,  which  increased  from 
1,060  million  marks  in  the  year  1850  to  6,554  million  marks 
in  1884.  Another  method  of  arriving  at  an  approximate  idea 
of  the  increase  of  public  wealth  is  to  take  the  amount  of  duties 
levied  on  all  steam  industries.  Dr.  Engel  computes  the  actual 
assessed  capital  in  the  German  Empire  employed  in  these 
industries  at  11,104  million  of  marks.  Dr.  Soetbeer,  in  his 
valuable  work  on  the  extent  and  distribution  of  wealth,  though 
taking  a  somewhat  pessimistic  view  of  the  situation,  states 
that  in  the  kingdom  of  Prussia  alone  during  the  period 
1872-78  —  a  period  of  industrial  stagnation  —  there  was 
found  to  be  a  sensible  increase  in  the  national  wealth,  as 
the  following  table  will  show:  — 


Years. 

National  Income. 

Per  Head  of 
Population. 

Marks. 

Marks. 

1872  . 

6,969,000,000 

293 

1873  . 

7,195,000,000 

299 

1874  . 

7,532,000,000 

307 

1875  . 

7,628,000,000 

311 

1876  . 

7,857,000,000 

316 

1877  . 

7,992,000,000 

315 

1878  . 

8,069,000,000 

323 

As  an  indication  of  the  increase  of  national  income,  if  we 
estimate  it  simply  from  the  income-tax  assessments,  it  will 
be  seen  that  the  tax-paying  income,  which  amounted  in  1854 
to  802  million  marks,  rose  in  1878  to  957  millions,  — an  in¬ 
crease  of  800  per  cent.  It  is  evident,  therefore,  from  an 
examination  of  Soetbeer’s  that  there  has  been  a  very  consid¬ 
erable  increase  in  the  national  wealth  of  Prussia. 

The  remaining  western  European  countries  also  afford 
valuable  materials  for  researches  into  the  question  of  the 
growth  of  economic  power.  Thus  in  the  case  of  Austro- 
Hungary,  C.  von  Czoernig,  basing  his  calculations  upon 
various  statistical  returns,  estimates  roughly  the  income 
derivable  from  land,  mining,  and  other  industries  in  1859 
at  about  3,860  million  florins;  an  unofficial  publication 
issued  in  1868  estimates  it  at  4,300  millions  ;  and  the 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


477 


figures  for  the  year  1874,  taking  the  very  lowest  estimate, 
may  be  reckoned  at  from  5,500  to  6,000  million  florins. 
M.  Falbe  Hansen  is  of  opinion  that  the  national  wealth  of 
Denmark  amounted  in  1878  to  2  million  reich thalers,  and 
M.  Massalski  estimates  that  of  Belgium  at  29  milliard 
francs;  and  as  regards  Sweden,  it  appears  from  a  work 
which  has  been  issued  by  an  anonymous  statistician,  who 
has  evidently  devoted  much  care  and  attention  to  the  subject, 
that  its  national  wealth  in  the  year  1876  amounted  to  four 
and  one  half  milliards  kroners,  or  five  milliards  marks. 

Still  more  interesting  than  this  review  of  Europe  is  a  study 
of  the  remarkable  progress  which  has  been  made  in  the  eco¬ 
nomic  conditions  of  the  United  States.  This  country  pos¬ 
sesses  the  data  of  regular  valuations  at  every  census,  and 
from  them  we  find  that  in  1790  the  wealth  of  the  then  three 
millions  of  inhabitants  was  estimated  at  1750,000,000  or  an 
average  of  $187  to  each  person.  The  decennial  increase  since 
that  date  is  shown  in  the  following  table :  — 


Year. 

Population. 

Wealth. 

Decennial 
Percentage 
Increase  of 
Population. 

Decennial 
Percentage 
Increase  of 
Wealth. 

Average 
Property  to 
each 
Person. 

1790.  .  . 

3,929,827 

$750,000,000 

Per  cent. 

Per  cent. 

$187 

1800.  .  . 

5,305,937 

1,072,000,000 

3502 

4300 

202 

1810.  .  . 

7,239,814 

1,500,000,000 

36*43 

3900 

207 

1820.  .  . 

9,638,191 

1,882,000,000 

3313 

25-40 

195 

1830.  .  , 

12,866,020 

2,653,000,000 

33-40 

41-00 

206 

1840.  .  . 

17,069,453 

3,764,000,000 

32-67 

41-70 

220 

1850.  .  . 

23,191,876 

7,136,000,000 

35-87 

89-60 

307 

1860.  .  . 

31,500,000 

16,159,000,000 

35-59 

126-42 

514 

1870 .  .  . 

38,558,000 

30,069,000,000 

2200 

86-13 

780 

1880.  .  . 

50,155,783 

43,642,000,000 

3000 

4500 

870 

Here  also  the  progress  of  national  wealth,  as  in  England, 
was  very  slow  prior  to  the  year  1840,  after  which  a  much 
more  rapid  increase  was  made.  The  remarkable  difference 
between  the  figures  of  1850  and  1860  is  attributed  in  the 
census-volume  itself  to  an  undervaluation  for  the  year  1850. 
It  is,  however,  affirmed  that  a  sufficient  improvement  in  sta¬ 
tistical  methods  has  taken  place  since  1860  to  permit  of  a 


478 


ECONOMIC  HISTORY. 


correct  comparison  of  the  figures  of  that  year  with  those  of 
1870  and  1880,  and  to  establish  statistically  a  rapid  growth, 
particularly  in  the  decade  from  1860  to  1870.  Especially  in 
1880  was  an  exact  and  comprehensive  method  employed  in 
order  to  ensure  the  greatest  possible  accuracy.  The  com¬ 
parative  slowness  in  the  increase  of  wealth  from  1870  to  1880 
is  explained  by  the  census  commissioner  by  two  considera¬ 
tions.  In  the  first  place  the  valuation  in  1870  was  made 
upon  the  basis  of  a  depreciated  currency,  but  in  1880  upon 
a  gold  basis ;  and  in  the  second  place  there  has  been  an  in¬ 
creasing  tendency  of  personal  property  to  escape  assessment. 
In  any  event  the  depression  in  the  years  1874  to  1879  has 
also  exerted  an  appreciable  influence. 

The  aggregate  of  the  national  wealth  for  1880  is  made  up 
from  the  following  particular  valuations:  — 

Mill.  Doll. 


Farms . 10,197 

Residences  and  business  real-estate,  including  water¬ 
power  .  9,881 

Railroads  and  equipment . 5,536 

Telegraphs,  shipping,  and  canals .  419 

Live  stock,  farming-tools,  and  machinery  ....  2,406 

Household  furniture,  paintings,  jewelry,  books,  etc.  .  5,000 

Mines  and  quarries,  together  with  \  the  annual  pro¬ 
duct  .  781 

Three-quarters  of  the  annual  product  of  agriculture 
and  manufacture  and  of  the  annual  importation  of 

foreign  goods . 6,160 

Churches,  schools,  asylums,  public  buildings  .  .  .  2,000 

Specie .  612 

Miscellaneous  items,  including  tools  of  mechanics  .  650 


Total . 43,612 


In  this  summary  of  national  wealth,  which  appears  not  to 
have  been  based  upon  the  assessed  valuation  of  property,  as 
that  amounted  only  to  $16,908,000,000,  but  upon  25,000 
replies  to  inquiries  and  upon  numerous  local  estimates,  the 
public  debt  of  the  Union  has  not  been  taken  into  considera¬ 
tion,  although  it  is  chargeable  in  some  manner  to  the  total 
national  wealth  pro  rata  parte  ;  but  allowance  has  been  made 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


479 


for  private  indebtedness,  the  debts  of  the  various  States, 
corporations,  insurance  companies,  mortgages,  etc.  The  cor¬ 
rectness  of  the  data  has,  however,  been  established  with 
greater  accuracy  as  regards  the  details,  and  under  any  cir¬ 
cumstance  we  have  here  to  do  with  one  of  the  most  inter¬ 
esting  direct  valuations  of  modern  times. 

For  the  completion  of  the  foregoing  data  concerning  the 
national  wealth  of  the  United  States  certain  figures  from  the 
annual  reports  of  the  Treasury  Department  will  serve,  as  they 
likewise  tend  to  show  both  the  rapid  increase  of  national 
prosperity  in  recent  years  and  in  particular  the  remarkable 
fluctuations  since  1879. 


[Millions  omitted.] 


For  Fiscal  Years  Ending 
30th  June. 

1875. 

1880. 

1881. 

1883. 

1883. 

1884. 

Ordinary  national  rev¬ 
enue  . 

2840 

333-5 

360-8 

403-5 

398-3 

348-5 

Ordinary  national  ex¬ 
penditure  (exclu¬ 
sive  of  sinking  fund 
and  interest  on 
debt) . 

171-5 

169-1 

1771 

186-9 

206-2 

189-5 

Net  public  debt  .  . 

2,1287 

1,942-2 

1,840-6 

1,688-9 

1,5511 

1,4500 

Interest  on  public 
debt . 

1031 

95-8 

82-5 

71 1 

59-2 

54-6 

It  would  be  impossible  to  find  in  the  financial  position  of 
any  other  State  such  striking  evidence  of  the  increase  of 
national  wealth  as  is  discernible  in  the  above  figures. 

The  figures  which  we  have  already  quoted  will  be  sufficient 
to  convince  every  one  of  the  very  remarkable  universal  in¬ 
crease  which  has  taken  place  in  national  wealth  during  the 
latter  part  of  the  present  century,  both  incomes  and  capital 
having  increased  in  a  much  more  noticeable  degree  during 
this  period  than  in  any  other.  We  will  therefore  proceed  to 
a  statement  of  the  causes  which  have  contributed  to  this 
vast  increase  of  wealth, —  and  this  is  a  subject  which  cannot 
be  dismissed  in  a  few  words,  but  requires,  in  order  to  make 
it  thoroughly  clear  and  comprehensive,  to  be  dealt  with  some¬ 
what  exhaustively.  It  will  here,  however,  be  practicable  only 


480 


ECONOMIC  HISTORY. 


to  enumerate  in  as  clear  and  concise  a  manner  as  possible 
what  have  been  the  most  important  factors  in  determining 
this  remarkable  development  of  national  wealth.  One  of  the 
chief  points  to  be  considered  is  the  influence  exercised  on  the 
economic  conditions  of  the  world  by  the  introduction  of 
machinery  and  its  substitution  for  manual  labor,  which  is 
one  of  the  growths  of  the  present  century.  The  importance  of 
the  wonderful  inventions  and  improvements  which  have  taken 
place  is  visible  in  the  effect  which  they  have  had  upon  the  in¬ 
crease  of  capital  invested  in  machinery,  and  which  as  an  in¬ 
vestment  has  far  exceeded  in  profit  that  employed  in  manual 
labor.  Then  too  the  application  of  steam,  which  has  wrought 
so  complete  a  change  in  locomotion  must  be  recognized.  As 
an  indication  of  the  vast  amount  of  the  world’s  capital  which 
is  invested  in  steam  undertakings,  we  may  mention  that  Dr. 
Engel,  in  one  of  his  interesting  publications,  estimates  the 
capital  so  invested,  in  round  numbers,  at  133  milliard  marks, 
distributed  as  follows:  eighty  milliards  in  railways,  forty 
milliards  in  various  steam  undertakings,  five  milliards  in 
sea-going  steamships,  and  the  remainder  in  river  steamers. 
The  part,  then,  taken  by  steam  as  a  motive  power,  and  the 
introduction  of  machinery  in  the  improvement  of  the  eco¬ 
nomic  conditions  of  the  world,  are  of  the  very  greatest  impor¬ 
tance.  These  inventions  have  been  the  means  of  causing  a 
very  large  increase  in  the  accumulation  of  national,  and  in  a 
corresponding  degree  of  the  world’s  wealth.  Another  impor¬ 
tant  element  to  which  we  must  direct  attention  is  the  devel¬ 
opment  of  the  credit  system,  which  has  in  all  civilized  parts 
of  the  world  taken  place  during  the  last  twenty-five  years. 
This  does  not  necessarily  produce  fresh  capital,  but  it  has 
the  effect  of  facilitating  the  better  application  of  capital 
which  is  anywhere  disposable;  floating  capital  is  collected 
and  is  brought  into  more  permanent  forms  of  investment. 
Deposit  banks,  savings  banks,  and  credit  institutions,  and 
above  all  the  general  employment  of  bills  of  exchange,  which 
have  now  become  universally  adopted,  have  all  been  the 
means  of  supplying  what  was  in  earlier  years  a  want  much 
felt,  and  have  become  important  factors  in  determining  the 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


481 


augmentation  of  capital.  The  judicious  operations  of  bank¬ 
ing  are  mainly  instrumental  in  rendering  capital  active  and 
productive.  It  will  be  seen  by  reference  to  the  international 
savings  bank  statistics,  published  by  the  Italian  Statistical 
Bureau  in  1876,  how  vast  the  operations  of  savings  banks 
were.  From  this  work  it  appears  that  although  these  insti¬ 
tutions  were  only  established  some  forty  or  fifty  years  ago, 
yet  in  the  year  1875  in  Europe  alone  about  6,400,000,000 
marks,  and  in  the  United  States  about  3,500,000,000  marks, 
making  in  round  numbers  a  total  of  10  milliard  marks,  had 
been  invested.  This  is  a  sufficient  indication  of  the  influence 
exercised  over  the  accumulation  of  capital  by  other  and  simi¬ 
lar  institutions,  and  tends  to  show  how  by  this  credit  system 
activity  and  usefulness  have  been  given  to  accumulations 
which  without  these  benefits  would  have  become  mere  hoards. 
And  lastly,  we  come  to  the  question  of  the  maintenance  of 
the  working  population;  and  here  we  cannot  lay  too  much 
stress  upon  the  necessity  which  exists  of  increasing  and 
maintaining  a  national  working  population,  this  population 
in  itself  representing  so  much  living  capital. 

We  will  now  turn  to  another  method  of  estimating  wealth, 
namely,  an  attempt  to  determine  the  economic  condition  of  a 
country  during  a  fixed  period  of  time.  This  is  a  labor  analo¬ 
gous  to  that  which  the  science  of  meteorology  has  to  set 
before  itself  in  determining  the  peculiarities  of  weather  in  a 
certain  neighborhood.  As  climate  depends  on  a  great  com¬ 
plexity  of  individual  elements,  so  what  we  call  the  world’s 
economy  is  the  result  of  various  factors,  which  act  upon  the 
material  processes  of  life  in  a  given  population  with  greater  or 
less  power.  In  both  cases,  in  the  statistics  of  meteorology  and 
economy,  a  similar  analytical  examination  of  the  causes  of  a 
total  impression  have  to  be  the  object  of  investigation ;  but 
while  meteorology  deals  with  actual  elements  or  factors  of  the 
present,  such  as  atmospheric  pressure,  temperature,  humidity, 
direction  and  force  of  wind,  etc.,  while  it  possesses  exact 
measuring  instruments  for  the  determination  of  these,  and 
finally  can  supply  itself  with  an  endless  series  of  exact  obser¬ 
vations,  economic  statistics  must  be  satisfied  with  surrogates 

31 


482 


ECONOMIC  HISTORY. 


of  the  methods  of  natural  science.  In  order  to  calculate  upon 
the  real  elements  of  economic  conditions  when  frequently  re¬ 
maining  concealed,  our  investigation  must  often  be  satisfied 
with  such  appearances  as  lie  upon  the  surface,  and  which  in 
their  nature  are  merely  symptoms,  and  actually  have  them¬ 
selves  no  ultimate  effect  on  the  sources  and  action  of  things. 
Besides  this,  even  these  symptoms  cannot  in  the  real  signifi¬ 
cance  of  the  word  be  measured  or  exactly  expressed,  but  only 
individually  employed  for  computations  and  numerical  com¬ 
parisons.  And  finally,  the  same  primary  causes  in  the  mate¬ 
rial  life  of  culture  have  not  the  same  effects  among  all  nations 
and  at  all  times.  Thus  even  if  we  are  able  to  point  to  more 
than  mere  symptoms,  we  shall  have  to  be  careful  in  forming 
our  conclusions,  and  cannot  afford  to  overlook  that  almost 
all  such  results  must  in  their  very  nature  be  empirical,  that 
is  to  say,  must  depend  upon  laws  which  are  only  binding 
upon  the  given  circumstances  of  space  and  time,  and  in  no 
way  permit  us  to  generalize.  The  desired  object,  though 
comparatively  limited,  is  nevertheless  a  difficult  one  to 
attain ;  it  presents  an  array  of  operations  which  as  regards 
physical  science  are  superfluous,  but  are  here  indispensable. 
One  of  these  operations  consists  in  the  choice  of  the  most 
important,  and  of  a  study  of  the  remainder  of  the  accessible 
symptoms  of  the  economic  situation  which  are  capable  of 
being  estimated.  The  symptoms,  then,  of  the  world’s  econ¬ 
omy  will  be  dealt  with  in  the  following  pages.  Another, 
which  is  an  exact  operation  of  measurement,  consists,  accord¬ 
ing  to  our  theory,  in  the  endeavor  to  deduce  the  type  or  nor¬ 
mal  course  of  the  groups  of  facts  or  observations  chosen  as 
symptoms  of  the  economic  situation,  which  embrace  definite 
periods.  The  establishment  of  the  type  will  result  in  many 
cases  in  the  choice  of  normal  years  as  the  point  of  compari¬ 
son,  and  of  the  mean,  in  many  other  cases,  by  choosing  the 
commencement  or  the  end  of  the  series,  and  taking  the 
average  of  an  entire  period  as  the  mean. 

There  is  scarcely  any  period  which  has  been  so  character¬ 
ized  by  a  series  of  powerful  reactions  as  that  comprised  be¬ 
tween  the  years  1870-85.  From  1870  until  the  middle  of 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


488 


1873  almost  everywhere  the  progress  of  economic  life  could 
be  clearly  traced,  and  this  was  a  period  marked  by  a  com¬ 
mercial  crisis  which  made  itself  universally  felt.  There 
followed  then  a  time  of  depression  lasting  until  the  year 
1879,  when  a  reaction  set  in.  This  revival  was  experienced 
in  the  United  States  about  the  end  of  1879,  and  at  the  com¬ 
mencement  of  1880  was  felt  in  the  countries  of  western 
Europe,  Great  Britain,  the  Netherlands,  Belgium,  France, 
and  Germany.  The  effects  of  this  reaction  were  somewhat 
slow  in  manifesting  themselves  in  European  countries,  those 
first  experiencing  them  being  Holland,  England,  Belgium, 
and  France,  while  the  German  States,  Italy  and  Austro- 
Hungary  were  among  the  last.  It  will  be  impossible  in  a 
work  of  this  description  to  pursue  a  complete  analytical  in¬ 
vestigation  into  all  the  symptoms  which  are  likely  to  afford 
any  indication  of  the  position  of  economic  progress.  These 
symptoms  must  be  considered  in  groups,  which  we  shall 
classify  as  follows, — primary  symptoms,  secondary  symp¬ 
toms,  and  reflective  symptoms. 

Under  primary  symptoms  we  proceed  first  to  deal  with  the 
question  of  the  extent  of  production.  There  is  no  more  re¬ 
liable  basis  on  which  to  determine  the  real  economic  condi¬ 
tion  during  a  fixed  period  of  time  than  that  which  lies  in  the 
activity  manifested  in  producing  power ;  but  in  considering 
this  subject  we  must  not  lose  sight  of  the  fact  that  great  dis¬ 
crimination  is  necessary  to  distinguish  between  the  relative 
importance  of  these  symptoms  of  increased  production.  For 
instance,  we  must  inquire  whether  that  particular  branch  of 
industry  in  which  such  expansion  is  visible  affects  articles 
which  are  liable  to  extremes  of  activity  and  depression,  and 
whether  by  this  the  decline  of  great  industries  is  regulated ; 
and  again  we  must  satisfy  ourselves  to  what  extent  the  im¬ 
provements  or  the  reverse  are  affected  by  the  prevailing  con¬ 
ditions  of  administration  or  government.  As  affording  a 
certain  indication  of  the  position  of  economic  progress,  we 
will  take  the  case  of  mining  industries.  Activity,  or  stag¬ 
nation  here  are  certain  symptoms  of  favorable  or  unfavorable 
position.  On  the  other  hand,  if  we  take  the  case  of  harvests 


484 


ECONOMIC  HISTORY. 


and  the  wheat  productions  of  good  and  bad  years,  as  these 
are  affected  by  the  weather,  and  are  entirely  dependent  for 
their  abundance  upon  the  rain  and  sun  in  due  season,  they 
have  only  a  casual,  and  not  what  we  should  call  a  sympto¬ 
matic  character. 

Let  us  now  draw  our  deductions  from  the  symptoms  as 
manifested  in  the  extent  of  production  during  the  period 
1870-85.  All  of  the  more  important  industries  of  the  world 
experienced  from  1870  to  1878  a  wonderful  extension,  and 
as  affecting  the  world’s  prosperity,  this  may  be  regarded 
as  a  token  of  the  most  favorable  economic  conditions.  We 
will  take  as  an  example  the  enormous  increase  in  cotton 
industries  and  in  mines  and  iron  works.  As  regards  the 
former,  the  number  of  spindles  and  looms  have  everywhere 
increased  very  considerably,  and  the  quantity  of  yarn  and 
woven  goods  exported  from  England,  which  amounted  in 
1870  to  942  million  pounds,  rose  in  1878  to  1,078  millions. 
The  value  of  cotton  goods  in  the  same  period  increased  from 
ninety-three  millions  sterling  to  104  millions,  —  similar 
symptoms  are  everywhere  visible  in  the  industries  of  the 
world  for  the  same  period.  As  regards  iron  works,  there 
was  a  considerable  increase  in  the  number  of  furnaces  set 
up,  and  the  total  production  of  pig  iron  in  the  world  rose 
from  twelve  million  tons  in  1870  to  nearly  fifteen  millions 
in  1878.  Everything  during  this  period  in  fact  tended  to 
prove  that  the  world’s  prosperity  was  making  very  rapid 
strides.  A  change,  however,  was  wrought  by  the  commer¬ 
cial  crisis  of  1878,  and  the  effect  of  this  crisis  was  to  para¬ 
lyze  both  the  textile  and  iron  industries,  the  statistics  of  the 
amount  of  production  in  each  case  showing  a  gradual  but 
steady  diminution.  In  the  chief  centres  of  the  iron  industry 
there  were,  at  the  end  of  1876,  2,537  furnaces  in  existence, 
which  were  approximately  capable  of  producing  at  the  lowest 
estimate  twenty  million  tons  of  iron;  there  were,  however, 
but  1,329  of  these  furnaces  at  work,  while  1,208  were  at  a 
standstill,  and  the  quantity  of  iron  produced  amounted  to 
only  280  million  centners. 

Again  in  1878  we  have  very  good  authority  for  stating  that 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


485 


it  was  a  time  of  almost  universal  depression.  To  demonstrate 
this  more  clearly,  we  will  take  the  case  of  the  most  impor¬ 
tant  of  the  great  industries,  namely,  the  cotton  industries, 
which  in  Great  Britain,  under  favorable  circumstances,  give 
employment  to  some  four  millions  of  people.1  In  the  years 
1876  and  1877,  though  there  were  large  sales  owing  to  a  great 
amount  of  stock  having  accumulated,  the  prices  obtained 
were  considerably  below  the  market  value.  In  1878  there 
set  in  a  complete  cotton  crisis,  and  the  effects  of  this  were 
more  severe  than  any  which  had  been  experienced  by  the 
preceding  generation.  In  the  more  firmly  established  houses 
the  hours  of  labor  were  shortened,  while  in  others  business 
was  entirely  suspended,  and  there  ensued  a  period  of  de¬ 
pression,  not  only  as  regards  England,  but  in  fact  the  whole 
world,  unparalleled  in  commercial  history.  According  to 
Ellison’s  cotton  reports  the  depression  reached  its  climax 
during  the  first  three  months  of  1879,  when  there  was  appar¬ 
ent  an  indication  of  a  grand  revival  of  trade.  The  same 
features  which  characterized  the  cotton  trade  were  apparent 
in  woollen,  silk,  and  linen  industries,  —  the  depression  in 
the  two  latter  being  more  marked  than  in  the  former. 

It  was  only  in  the  latter  part  of  1879  and  in  the  beginning 
of  1880  that  a  marked  improvement  was  to  be  seen  in  most 
of  the  important  industries.  It  was  particularly  noticeable 
in  the  coal  trade,  the  increase  in  the  production  of  which  in 
Great  Britain,  Germany,  France,  Belgium,  and  more  espe¬ 
cially  in  America  (from  fifty-two  million  tons  in  1878  to  sixty- 
nine  millions  in  1880),  may  be  assuredly  taken  as  a  certain 
indication  of  a  steady  improvement  in  the  world’s  economic 
conditions.  Soon  afterwards,  in  the  autumn  of  1879,  a  stim¬ 
ulus  was  given  to  the  production  of  iron  in  America,  followed 
in  a  few  months  by  renewed  activity  in  the  iron  industries 
of  Great  Britain  and  most  of  the  European  countries.  The 
fires  which  had  been  for  some  time  extinguished  were  once 
more  kindled,  and  the  production  of  iron  increased  in  one 
year  at  the  rate  of  between  twelve  and  twenty-one  per  cent. 
There  was  also  renewed  activity  in  the  smelting  and  puddling 

1  This  seems  a  great  over-estimate.  —  Editor  of  “Journal.” 


486 


ECONOMIC  HISTORY. 


works,  and  in  fact  towards  the  end  of  1880  there  was  not 
only  a  marked  but  a  widespread  improvement  of  trade.  The 
cotton  industries  of  the  world  particularly  exhibited  signs 
of  revival,  and  this  may  be  accepted  as  a  certain  symptom  of 
an  amelioration  of  the  economic  position.  Taking  the  case 
of  spun  yarn,  the  weekly  production,  which  in  Great  Britain 
amounted  in  the  year  1878-79  to  50,026  pounds,  and  on  the 
Continent  to  47,352  pounds,  rose  in  1879-80  to  58,038  and 
50,344  pounds  respectively,  thus  showing  an  increase  in  this 
one  article  of  572,200  pounds,  or  nearly  twelve  per  cent  in 
this  year  alone.  The  other  branches  of  textile  industries  did 
not  in  the  same  degree  exhibit  such  an  improvement,  yet  it 
was  evident  that  toward  the  close  of  1880  unmistakable  signs 
of  revival  were  not  wanting.  This  revival  continued  during 
the  years  1881-82,  but  was  not  however  destined  to  be  per¬ 
manent.  The  capacity  of  the  markets  of  the  world  was 
everywhere  overestimated,  and  the  extent  of  production  in 
the  principal  industries  soon  exceeded  the  demand.  Al¬ 
though  in  1883  an  extension  in  some  of  the  branches  of  pro¬ 
duction  was  still  noticeable,  yet  the  prices  of  the  various 
products  had  commenced  to  decline.  During  the  years  1884- 
85  the  decline  in  the  production  of  all  the  industries  to  which 
we  have  here  called  attention  was  most  clearly  marked ;  and 
as  these  industries  comprise  three-quarters  of  the  value  of 
the  entire  production  of  the  world,  depression  or  activity  in 
them  forms  an  excellent  indication  of  the  actual  prosperity 
of  the  world. 

Again,  the  extent  of  consumption  is  of  symptomatic  im¬ 
portance  in  regard  to  the  condition  of  national  wealth. 
The  increase  or  decrease  in  the  consumption  of  articles 
which  may  be  termed  necessaries,  such  as  breadstuff s,  provi¬ 
sions,  and  clothing,  are  not  such  reliable  signs  of  an  im¬ 
provement  or  the  reverse  in  national  prosperity  as  the  same 
fluctuations  which  may  be  observed  in  those  articles  which 
are  not  indispensable  to  man,  and  come  under  the  heading  of 
luxuries,  as  it  is  obvious  that  in  a  time  of  depression  there 
would  be  a  far  more  restricted  consumption  in  the  latter  than 
would  be  found  if  trade  and  industries  were  flourishing  and 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


487 


prosperous.  Although  the  data  are  of  a  somewhat  meagre 
description,  we  will  again  take  the  period  of  1870-  85  in 
which  to  form  our  conclusions  as  to  the  position  of  national 
wealth,  judging  from  the  extent  of  consumption.  If  we  look 
first  at  the  consumption  of  coffee,  tea,  sugar,  and  tobacco, 
it  would  appear  that  the  same  indications  are  shown  of 
material  prosperity  during  the  period  of  1870-78,  and  that 
the  effect  of  the  commercial  depression  which  followed  this 
period  did  not  so  seriously  affect  the  national  wealth  as 
might  have  been  expected,  the  consumption  being  certainly 
to  some  extent  limited,  but  in  most  countries  only  in  a  very 
slight  degree.  From  1878  to  the  end  of  1879  seems  to  have 
been  the  most  unfavorable  time  of  the  whole  period.  On 
the  other  hand,  in  the  year  1880  a  revival  is  perceptible 
throughout  the  economic  world,  which  continued  with  vigor 
during  the  years  1881-82,  and  was  again  checked  in  the  years 
1883-84.  As  an  example  of  the  consumption  of  coffee,  the 
supply  received  in  Europe  in  1871  amounted  to  2.47  million 
centners,  in  1875  to  3.30  millions,  but  in  1880  it  fell  as  low 
as  2.74  million  centners.  From  1880  the  consumption  stead¬ 
ily  increased  until  1883,  when  it  reached  4.39  million  cent¬ 
ners.  It  then  again  declined  to  4. 09  million  centners  in  1884, 
and  to  4. 31  in  1885.  The  great  increase  in  the  consumption 
of  tea  in  1870-74  was  almost  universal;  it  was  only  in  1878- 
79  that  the  consumption  was  first  checked;  and  in  the  years 
1880-83  it  again  distinctly  increased.  The  same  may  be  said 
as  regards  tobacco.  A  study  of  these  articles  in  individual 
countries  also  reveals  similar  economic  indications.  In 
America,  for  instance,  in  the  fiscal  year  1879-80  the  quan¬ 
tity  of  coffee  imported  amounted  to  sixty-nine  million  pounds, 
or  1.4  pounds  per  head  of  the  community;  that  of  tea  to 
twelve  million  pounds,  or  0.25  pounds  per  head;  tobacco 
leaf  to  three  millions  ;  wine  6,394  million  gallons  and 
1,303,356  bottles;  and  the  American  people  retained  in  this 
year  for  home  consumption  about  130  million  pounds  more 
of  refined  sugar  than  they  had  done  in  previous  years.  In 
England,  though  this  was  a  favorable  year,  yet  the  increase 
in  luxuries  was  small,  only  cocoa,  wine,  and  tobacco  being 


488 


ECONOMIC  HISTORY . 


consumed  in  greater  quantities,  whereas  there  was  a  decrease 
in  tea,  coffee,  and  sugar.  An  examination,  however,  of  the 
return  of  taxes  for  the  last  nine  months  of  the  year  1880 
point  conclusively  to  the  fact  that  the  economic  position  was 
substantially  ameliorated.  In  France  the  signs  of  increas¬ 
ing  prosperity  were  more  apparent  than  in  England,  a  very 
considerable  augmentation  in  the  imports  of  coffee,  sugar, 
and  tea  being  perceptible  in  1880,  and  although  this  year 
was  not  a  very  favorable  one  as  regards  the  wine  production, 
yet  as  a  set-off  against  this  there  were  in  1880,  852,000 
hectolitres  more  beer  consumed  than  in  1879,  and  about 
9,468  kilograms  (valued  at  nine  million  francs)  of  tobacco 
and  cigars  than  in  the  previous  years,  and  there  are  not 
wanting  signs  to  show  that  this  increase  of  material  prosper¬ 
ity  was  not  of  a  spasmodic  character.  A  similar  progress  was 
also  to  be  seen  in  Belgium.  And  finally  we  will  take  the 
case  of  Germany,  where  in  the  year  1878  about  8.7  million 
marks  more  duty  was  paid  on  luxuries,  such  as  sugar,  to¬ 
bacco,  brandy,  and  beer,  than  in  previous  years,  and  this  in 
connection  with  the  information  already  given  with  regard 
to  the  imports  of  foreign  produce,  effectually  removes  all 
doubt  as  to  the  improvement  at  that  time  in  its  economic 
position.  Only  in  Italy  was  there  to  be  found  a  slight  indi¬ 
cation  of  an  unfavorable  tendency,  and  in  Austria  there  was 
an  inference  of  the  maintenance  of  the  status  quo ,  the  revival 
in  both  instances  having  taken  place  since  1880. 

No  one  who  has  studied  the  commercial  statistics  of  the 
decade  1870-1880  can  fail  to  be  impressed  with  the  enormous 
increase  which  has  taken  place  in  the  consumption  of  textile 
fabrics,  iron,  steel  rails,  and  the  production  of  other  staple  in¬ 
dustries.  To  follow  these  in  all  their  details  would  be  out  of 
place  here ;  it  will  only  be  necessary  to  remark  that  they  ex¬ 
perienced  a  moderate  rise  dating  from  the  year  1873,  and  a 
partial  decline  in  1880.  As  an  American  writer  forcibly  put 
it,  the  poor  man  in  the  time  of  depression  wore  his  coat  twice 
as  long  as  he  otherwise  would,  the  rich  man  entertained  less, 
and  in  many  instances  disposed  of  his  horses  and  carriages ; 
the  tailor  and  the  shoemaker  complained  that  they  had  much 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


489 


to  mend  and  but  little  to  make.  As  an  illustration  of  this, 
we  may  mention  that  in  England  in  1878  about  twenty-six 
million  pounds  less  wool  and  897,588  pounds  less  silk  were 
consumed  than  in  1877,  and  besides  this,  all  the  warehouses 
were  full  of  stock.  The  universal  decrease  in  the  consump¬ 
tion  of  these  staple  articles  continued  during  the  gloomy 
period  1874-79.  The  depression  was  of  such  a  lasting  char¬ 
acter,  and  carried  such  disheartening  effects  in  its  train, 
that  one  hardly  cared  to  inquire  how  it  happened  that  such 
an  unfavorable  state  of  affairs,  unbroken  by  any  prospect  of 
a  speedy  revival,  could  exist  in  central  Europe  and  America. 
With  this  restriction  in  consumption  was  associated  a  cur¬ 
tailment  of  profits  and  a  consequent  lessening  of  income; 
and  when  in  1879  the  horizon  commenced  to  clear,  and  the 
first  ray  of  hope  was  to  be  seen,  it  was  welcomed  with  a 
feeling  of  intense  relief  by  all  classes  of  the  community. 

We  will  now  see  from  the  extent  of  commercial  facilities 
what  conclusions  may  be  formed  as  to  the  actual  economic 
position;  and  it  appears  to  us,  after  many  years  of  patient 
observation,  that  the  increased  activity  in  commercial  enter¬ 
prises  should  assuredly  be  placed  in  the  front  rank  of  what  we 
have  called  the  primary  symptoms.  If  one  follows  the  im¬ 
provements  which  have  during  the  last  few  years  been  made 
in  railways,  postal  systems,  telegraphs,  banking,  etc.,  one 
cannot  fail  to  be  impressed  with  their  very  vast  importance 
as  factors  in  determining  the  condition  of  the  world’s  pros¬ 
perity.  Thus,  in  all  civilized  parts  of  the  world,  railways, 
one  of  the  most  important  of  these  factors,  showed  a  very 
rapid  increase  from  1870  to  1878  or  1874,  both  in  the  number 
of  passengers  carried  and  in  the  quantity  of  goods  conveyed, 
and  as  a  natural  consequence  the  receipts  from  both  sources 
greatly  increased.  From  1874  to  1878,  and  in  many  countries 
until  1879,  there  ensued  a  period  of  stagnation  in  railroad 
enterprise,  and  in  fact  to  such  an  extent  that  not  only  were 
the  effects  very  disastrous  as  regards  industry,  but  great  social 
dangers  were  apprehended. 

As  an  example  of  the  stagnation  of  industrial  life  in  North 
America,  we  may  state  that  the  loss  to  holders  of  scrip  in 


490 


ECONOMIC  HISTORY. 


bankrupt  or  worthless  railways  in  18TT  is  estimated  in  round 
numbers  at  1000  million  dollars,  and  that  they  were  power¬ 
less  to  prevent  the  fearful  strike  which  happened  on  the  Balti¬ 
more  and  Ohio  Railway  on  16th  July,  1877.  It  was  only  in 
1879,  or  the  beginning  of  1880,  that  an  improvement  mani¬ 
fested  itself  in  railway  enterprise,  and  the  revival  was  first 
experienced  in  the  United  States.  In  Great  Britain,  France, 
Belgium,  and  Austro-Hungary  the  traffic  receipts  began  then 
gradually  to  increase  ;  while  in  Italy  alone  a  similar  impulse 
does  not  appear  to  have  been  given  until  the  autumn  of  1881. 
From  1881  to  1888  great  activity  in  railway  construction  and 
large  increase  of  traffic  were  manifested  in  all  countries  of 
western  civilization.  There  appeared,  however,  in  the  United 
States  symptoms  of  a  reaction  in  1883,  which  led  to  an  actual 
crisis  in  1884.  In  European  countries  also  a  stagnation  in 
commerce  began  in  1884,  which  continued  in  1885,  and  caused 
a  dangerous  diminution  in  the  dividends  of  railways. 

In  shipping,  the  same  features  are  to  be  seen  as  those  which 
characterized  railway  enterprise.  During  the  same  period  we 
notice  similar  peculiarities  in  this  particular  branch  of  indus¬ 
try.  The  fluctuations  in  the  number  and  tonnage  of  vessels 
built,  the  increase  or  decrease  in  the  tonnage  entering  or 
clearing,  and  the  amount  of  freight,  —  all  these  will  show  the 
condition  of  the  world’s  prosperity. 

The  postal  and  telegraphic  statistics  are  not  of  such  valu¬ 
able  assistance  as  symptoms  of  the  periodically  favorable  or 
unfavorable  condition  of  economic  progress.  We  will,  how¬ 
ever,  give  the  following  figures,  as  they  tend  to  show,  in  a 
slight  degree,  which  were  the  favorable  and  unfavorable 
periods.  The  number  of  newspapers  and  books  sent  through 
the  British  post-office  rose  from  202  millions  in  1871  to  254 
millions  in  1878,  that  is,  about  twenty-six  millions  annually; 
from  1873  to  1874,  however,  the  number  rose  to  only  258 
millions,  that  is,  about  four  millions  annually.  With  the  revi¬ 
val  of  trade  this  number  again  rose  from  328  millions  in 
1879  to  412  millions  in  1882,  that  is,  about  twenty-eight 
millions  annually,  the  same  as  before  the  crisis ;  and  from 
1882  to  1885,  to  464  m.,  indicating  a  slight  retrogression.  The 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


491 


number  of  telegrams,  which  in  1870  amounted  to  8.6  mil¬ 
lions,  increased  in  1874  to  17.8  millions,  showing  a  yearly 
increase  of  2.8  millions;  from  1874  to  1878  the  number 
only  increased  to  22.5  millions,  an  annual  increase  of  0.8 
million.  On  the  other  hand  in  1881  the  telegrams  amounted 
in  round  numbers  to  thirty  millions,  showing  an  average  in¬ 
crease  for  three  years  of  2.6  millions,  as  before  the  crisis  ; 
but  after  that  date  there  occurred  a  diminution,  as  in  1885 
the  number  had  reached  only  83.2  millions. 

Let  us  now  take  another  of  the  primary  symptoms  of 
economic  progress  ;  viz.,  the  state  of  the  money  market.  If 
we  look  at  the  value  of  paper  currency  as  the  substitute  for 
cash  payments,  we  find  that  it  increased  during  the  period 
1869-73  about  1,679  million  marks,  and  declined  from  that 
date  till  1879,  to  the  extent  of  2,350  million  marks.  At  this 
time  there  was  a  larger  amount  of  uninvested  capital  lying  idle 
than  had  ever  before  been  known.  The  bank  hoards  accumu¬ 
lated,  from  the  commencement  of  the  period  of  stagnation, 
at  least  1,100  to  1,200  millions  of  marks  in  gold  and  silver. 
If  we  take  the  returns  of  the  two  greatest  financial  institu¬ 
tions  in  the  world,  the  clearing  houses  of  London  and  of  New 
York,  we  find  that  they  show  an  increase  from  190  milliard 
marks  in  1870-71,  to  approximately  256  milliards  in  1873-74  ; 
and  on  the  other  hand  in  1878-79  they  stood  at  188  milliards, 
which,  taken  in  conjunction  with  the  increase  of  population, 
must  be  regarded  as  an  unusual  depression.  How  great  was 
the  revival  of  trade  in  1880  may  be  gathered  from  the  returns 
of  both  clearing  houses,  which  show  an  increase  from  203 
milliard  marks  in  1878-79  to  266  milliards  in  1880. 

The  condition  of  foreign  commerce,  though  of  course  af¬ 
fected  by  the  state  of  industrial  enterprise,  also  furnishes  in 
itself  an  important  symptom  of  the  economic  situation,  as 
by  it  one  can  compare  the  rise  and  fall  in  the  purchasing 
power  of  nations.  The  wonderful  fluctuations  in  national 
wealth  are  nowhere  more  clearly  shown  than  in  the  statistical 
trade  returns  of  the  last  decade.  The  figures,  although  they 
cannot  be  said  to  be  in  any  case  strictly  accurate,  still  point 
conclusively  to  progress  or  retrogression  in  material  pros- 


492 


ECONOMIC  HISTORY. 


perity.  In  almost  all  countries  the  export  returns  are  less 
reliable  than  the  statistics  of  imports.  It  must  be  borne  in 
mind  also  that  the  volume  of  foreign  trade  is  determined  not 
by  quantities  but  by  value,  and  this  is  to  a  certain  extent 
misleading,  as  changes  must  take  place  from  time  to  time  in 
the  aggregate  values  of  imports  and  exports ;  and  one  ought 
to  consider  how  far  these  changes,  which  are  due  to  fluctua¬ 
tions  in  average  prices  of  commodities,  affect  the  total  import 
and  export  trade.  We  find,  then,  from  an  examination  of  the 
trade  returns  of  the  most  important  countries  of  the  earth, 
that  the  total  import  and  export  trade  increased  from  1865 
to  1872  annually  2,166  million  marks;  from  1872  to  1873 
about  1,620  million  marks;  while  from  1873  to  1877  it  expe¬ 
rienced  a  sudden  and  rapid  decline.  The  year  1878  witnessed 
the  inauguration  of  a  brighter  era,  trade  improving  to  the 
extent  of  nearly  1,400  million  marks ;  and  this  revival  con¬ 
tinued  to  make  progress  throughout  the  years  1879  and  1880. 
To  avoid  misconception,  we  cannot  insist  too  much  upon  the 
influence  exercised  over  these  remarkable  fluctuations  by  the 
rise  and  fall  in  prices  ;  these,  of  course,  being  very  material 
elements  in  determining  the  general  totals  of  imports  and 
exports ;  but  even  making  due  allowance  for  the  effect  of  the 
changes  in  prices,  these  fluctuations  are  none  the  less  remark¬ 
able,  and  must  be  accepted  as  unmistakable  symptoms  of 
the  economic  situation.  From  the  trade  volumes  of  the  vari¬ 
ous  countries,  we  find  that  the  value  of  the  foreign  trade  of 
the  United  States  in  1880  exceeded  by  308  million  dollars 
that  of  the  preceding  year.  Great  Britain,  for  the  same 
period,  showed  an  increase  of  seventy-nine  millions  sterling, 
France  482  million  francs,  and  Austro-Ilungary  55  million 
florins.  These  four  countries,  then,  will  serve  as  an  illustra¬ 
tion  of  the  increasing  growth  of  economic  power,  having  in 
one  year  alone  raised  the  value  of  the  world’s  foreign  trade 
to  the  extent  of  about  3,300  million  marks. 

We  will  now  proceed  to  an  examination  of  those  symptoms 
of  economic  progress  which  we  have  designated  above  as 
secondary  symptoms,  and  will  consider  first  the  prices  of 
commodities  and  wages.  The  favorable  period,  comprised 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


493 


between  1870  and  1873,  was  characterized  by  a  general  rise 
in  the  prices  of  commodities  and  in  wages,  by  reason  of  the 
demand  for  industrial  power  far  exceeding  the  supply.  If 
we  look  at  the  trade  circulars  of  London,  Hamburg,  and 
New  York,  which  contain  regularly  the  same  staple  commodi¬ 
ties,  we  find  that  the  highest  prices  as  regards  textile  fabrics, 
iron,  tin,  copper,  most  articles  of  food,  and  colonial  produce, 
were  quoted  in  1873  and  1874.  The  tables  published  by  M. 
Bodio,  the  statements  of  Mr.  Giffen  in  the  Commercial  His¬ 
tory  of  the  “  Statist”  (1881),  the  quotations  of  the  New  York 
commercial  papers  and  of  the  Hamburg  lists,  all  point  to 
the  existence  of  this  symptom  in  the  economic  situation. 
Laspeyres  has  conclusively  shown  that  at  hardly  any  period 
had  the  prices  of  commodities  attained  such  a  high  rate  as 
during  the  year  1871.  The  decline  was  first  apparent  in 
Hamburg  in  1872;  in  New  York  and  London,  owing  to  the 
enormous  supply  on  hand,  it  was  experienced  in  1874  or  1875. 
This  decline,  though  gradual  at  first,  began  rapidly  to  assume 
larger  proportions,  and  continuing  until  the  middle  or  end  of 
1879,  points  to  the  existence  of  a  distinct  commercial  depres¬ 
sion.  Laspeyres  states,  on  the  authority  of  Hamburg  quota¬ 
tions,  that  the  fall  in  prices  of  commodities  in  Germany  from 
1873  to  1877  had  been  greater  than  after  an  experience  of 
forty  years  had  been  thought  possible.  As  regards  England 
the  “  Economist,”  in  its  annual  review,  gives  a  very  interest¬ 
ing  statement  showing  the  prices  of  staple  commodities  in 
1870,  as  compared  with  1845-50,  the  years  for  which  the 
index  number  of  100  may  be  taken.  From  this  it  appears 
that,  taking  twenty-two  categories  whose  total  index  number 
is  originally  2,200,  the  prices  stood  in  1870  at  2,689,  and  in 
1873  had  increased  to  2,947,  and  declined  in  1879  as  low  as 
2,202 ;  that  is,  had  fallen  to  the  prices  of  1845-50.  Mr. 
Giffen  points  out  in  an  exhaustive  review  that,  with  but  few 
exceptions,  the  English  heavy  goods  in  the  period  comprised 
between  1873-79  became  from  26  to  66  per  cent  cheaper.  In 
1878  lower  prices  ruled  than  had  ever  been  quoted  in  London 
since  1850.  M.  A.  de  Foville,  in  a  series  of  comparative  state¬ 
ments,  gives  some  interesting  details  of  trade  values ;  from 


494 


ECONOMIC  HISTORY. 


these  we  gather  that  in  1877  the  values  of  imports  into  France 
were  14.5  per  cent,  and  of  exports  27.1  per  cent  lower  than 
in  1862.  The  same  decline  was  experienced  everywhere,  and 
it  was  a  period  of  such  universal  commercial  depression  that 
many  industrial  establishments  had  to  forsake  all  branches  of 
their  business.  Many  important  woollen  firms  in  England  and 
America  failed,  owing  to  the  ruinous  prices  which  prevailed. 
The  decline  in  the  prices  of  coal  and  iron  caused  a  loss  in 
these  industries  in  Great  Britain  of  from  60  to  70  per  cent. 

The  enhancement  of  prices  was  first  observable  in  the 
United  States,  and  was  noticeable  in  the  case  of  pig  iron,  silk, 
and  steel,  at  the  end  of  1878,  and  this  upward  tendency  con¬ 
tinued  till  the  middle  of  1879.  For  example,  Pennsylvania 
pig  iron  rose  in  1878  from  16.5  to  18.5  dollars,  and  in  1879 
from  28  to  82.5 ;  it  continued  to  rise,  until  in  1880  it  attained 
the  average  price  of  88  dollars  per  ton,  approximately  the 
same  rate  as  was  quoted  in  1878 ;  in  the  same  way  the  Glas¬ 
gow  warrants,  whicli  were  quoted  in  1879  at  40s.  per  ton, 
reached  the  high  price  of  73s.  in  the  year  1880;  and  this 
favorable  impulse  was  not  wholly  confined  to  England  and 
America,  but  was  visible  throughout  the  commercial  world. 
The  twenty-two  goods  categories  of  the  “  Economist,”  which 
we  mentioned  above,  ascended  from  the  lowest  index  num¬ 
ber  in  1879;  viz.,  2,202,  in  one  year,  to  2,538,  an  increase  of 
about  16  per  cent.  Heavy  goods,  such  as  wool,  cotton,  yarn, 
twist,  and  manufactures,  experienced  during  the  course  of 
1880  a  still  greater  enhancement  of  prices.  According  to  the 
published  statistics  also  of  Germany,  the  rise  of  wholesale 
prices  in  1880,  as  compared  with  1879,  was  of  a  more  marked 
character  than  was  apparent  in  the  returns  of  the  majority  of 
the  other  European  countries. 

In  connection  with  the  variation  in  prices,  we  ought  at  the 
same  time  to  study  the  influence  they  exercised  over  wages. 
These  constitute  an  important  symptom  as  regards  industrial 
condition,  and  are  instrumental  in  determining  the  degree  of 
the  material  prosperity  of  various  classes  in  the  community. 
The  old  axiom  of  political  economists,  that  wages  only  fol¬ 
lowed  slowly  in  the  wake  of  prices,  has  of  late  years  suffered 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


495 


very  considerable  modifications.  The  effect  of  the  sinking  of 
prices  upon  wages  during  the  period  of  depression  between 
1874  and  1878  was  clearly  apparent,  and  the  same  marked 
influence  exercised  by  the  impulse  given  to  commercial  ac¬ 
tivity  and  the  improvement  of  the  industrial  condition  was 
particularly  noticeable  in  the  augmentation  of  wages  dating 
from  the  year  1879.  It  would  be  impossible  in  this  review  to 
enter  into  minute  details  of  the  fluctuations  during  the  vari¬ 
ous  periods  of  depression  and  commercial  activity ;  but  to 
show  how  high  wages  had  risen  before  the  crisis  of  1878,  we 
may  mention  that  a  special  brand  of  champagne  was  ordered 
for  the  Belgian  mining  districts,  and  thousands  of  bottles 
consumed.  In  England  the  wages  of  coal  miners  rose  from 
4s.  9 d.  a  day  in  1871  to  7s.  3 d.  in  1873,  and  in  Scotland  to 
8s.  6i. ;  whereas  in  October,  1878,  these  wages  had  been  re¬ 
duced  to  2s.  9c?.  a  day,  a  decrease  to  nearly  one  third.  Fur¬ 
nace  men  who  were  receiving  in  1869  only  3s.  9c?.  a  day,  in 
1872  were  paid  7s.  6c?.,  and  in  1873  as  much  as  8s.  6c?. ;  but 
in  1876  they  had  to  be  content  with  4s.  6c?.,  and  in  1878  with 
only  2s.  9c?.  a  day.  Puddlers  were  in  1868  in  the  receipt  of 
8s.  per  ton,  in  1873  13s.  3c?.,  in  1874  11s.  6c?.,  and  in  1878-79 
between  7s.  and  7s.  6c?.  During  this  latter  period  wages  in 
the  textile  industries  also  suffered  a  very  considerable  diminu¬ 
tion.  For  instance,  in  one  single  year  (1877-78)  the  spinners 
and  weavers  of  northeast  Lancashire  suffered  a  reduction  in 
wages  to  the  extent  of  10  per  cent,  and  those  of  Oldham  15 
per  cent.  It  has  been  stated  in  the  “  Times  ”  that  the  actual 
difference  of  miners’  wages  between  1873  and  1878  amounted 
to  as  much  as  twenty-six  millions  sterling.  The  reduction  of 
wages  was  not  confined  to  England  alone,  but  extended  also 
to  America.  We  find  there  that  after  a  period  of  commercial 
prosperity  and  high  wages,  there  ensued  a  time  of  such  un¬ 
paralleled  depression  (in  1876)  in  the  mining  districts  of 
Pennsylvania  that  it  had  the  most  disastrous  results,  one 
being  a  series  of  sanguinary  riots,  which  necessitated  for  a 
time  the  establishment  of  martial  law.  The  statistics  of 
England,  America,  Belgium,  and  Germany,  clearly  show  the 
increase  in  wages  from  the  commencement  of  1880.  Accord- 


496 


ECONOMIC  HISTORY. 


ing  to  the  estimates  of  Mr.  Fallows,  it  would  appear  that  the 
Scotch  miners  in  1879  received  on  an  average  6c?.,  and  in  1880 
9c?.  a  day,  more  than  they  earned  in  1878.  And  as  regards 
the  cotton  industries,  we  gather  from  Ellison’s  well-known 
reports  that  out  of  the  total  value  of  British  production,  in 
1879  only  forty-four  millions  sterling,  while  on  the  other 
hand  in  1880  forty-six  millions  sterling  were  put  by  for  wages 
and  profit.  From  America  we  have  abundant  information  re¬ 
specting  the  increase  of  wages  in  agricultural,  mining,  and 
other  industrial  enterprises,  and  these  clearly  show  the  im¬ 
provement  which  had  already  taken  place  in  1880  in  the  in-' 
dustrial  condition.  According  to  more  recent  statistics  wages 
continued  to  increase  during  the  years  1880-88,  and  again 
declined  in  1884-85. 

We  will  now  turn  to  the  subject  of  the  rates  of  discount,  as 
also  affording  an  indication  of  the  economic  progress.  During 
the  period  1870-79  there  were  very  many  fluctuations  in  the 
rates  of  discount.  The  Bank  of  England,  we  find,  previous 
to  the  commencement  of  the  period  on  which  we  have  made 
our  calculations,  only  changed  its  rate  two  or  three  times,  or 
at  the  most  seven  times  yearly.  In  1870  and  1871  it  was 
altered  ten  times,  in  1872  fourteen  times,  and  in  1873  twenty- 
four  times, —  in  this  year  the  bank  rate  was  raised  thirteen 
times.  The  rate  of  discount  stood  during  a  period  of  fifty- 
seven  days  at  6  per  cent,  during  twenty-two  days  at  7  per 
cent,  and  during  thirteen  days  at  8  and  9  per  cent.  The 
Bank  of  France  in  1870  and  1874  changed  its  rate  four  times, 
and  in  the  three  years  1871, 1872,  and  1873,  the  rates  were 
established  at  5  per  cent  for  735  days,  6  per  cent  during  349 
days,  and  7  per  cent  during  twelve  days.  Similar  fluctuations 
were  also  experienced  in  Germany.  In  1874  the  commercial 
depression  commenced  to  be  universally  felt,  and  from  then 
until  the  middle  of  1878  there  were  a  greater  number  of 
changes  in  the  rate  of  interest.  The  Bank  of  England  altered 
its  rate  five  times  during  one  year,  the  Bank  of  France  once 
only,  and  the  rate  was  everywhere  so  reduced  that  it  aver¬ 
aged  —  taking  the  chief  financial  centres,  London,  Paris, 
Amsterdam,  Berlin,  Vienna,  Frankfort,  and  Brussels  —  only 


PROGRESS  IN  TRADE  AND  INDUSTRY . 


497 


4.01  per  cent  in  1875,  3.52  per  cent  in  1876,  and  3.55  per  cent 
in  1877.  In  making  up  this  average,  the  higher  rates  which 
prevailed  in  Vienna,  Frankfort,  and  Berlin  (4J  to  5|  per  cent) 
are  taken  into  account,  as  well  as  the  lower  ones  of  London 
(2.47  per  cent),  Amsterdam  (3  per  cent),  and  Paris  (2.31  per 
cent),  although  these  last  determine  with  greater  accuracy 
the  industrial  position,  as  they  experienced  the  first  fall;  for 
in  1876  the  bank  rate  in  London  stood  at  2  per  cent  for  255 
days,  in  1877  again  for  170  days,  and  it  was  only  towards  the 
end  of  1877  that  there  was  a  rise.  In  1878  the  Bank  of 
England  rate  of  discount  was  scarcely  more  than  3|  and  4J 
per  cent,  but  in  the  open  markets  short  bills  were  discounted 
at  If  and  1\  per  cent.  In  Paris,  the  rate  was  at  the  most  1J 
and  If  per  cent,  and  it  stood  at  2  per  cent  only  once,  in  March, 
and  from  October  to  December  at  2J.  The  rates  at  Berlin, 
Amsterdam,  and  Brussels  exhibited  greater  regularity  in  their 
fluctuations  between  2J,  3f,  and  4J  per  cent.  The  unproduc¬ 
tiveness  of  floating  capital,  and  the  absence  of  speculative 
spirit,  cannot  be  said  to  afford  such  unfailing  symptoms  of 
material  prosperity  as  these  fluctuations  in  the  bank  rates. 
To  pursue  our  investigations  still  further,  we  find  that  dur¬ 
ing  the  latter  part  of  1878,  and  also  in  1879,  a  greater  os¬ 
cillation  was  to  be  found  than  in  1880 ;  again  the  increases 
in  the  rate  were  also  more  important  in  1878  and  1879  than 
in  1880,  and  clearly  indicated  a  stimulus  which  was  want¬ 
ing  in  1880.  The  alterations  in  the  Bank  of  England  rate 
amounted  in  1878  to  11,  in  1879  to  6,  and  in  1880  to  2  only ; 
but  in  1880,  taking  six  of  the  most  important  financial  circles 
of  Europe,  these  alterations  only  amounted  to  17,  of  which,  as 
we  have  already  shown,  2  occurred  in  London,  3  in  Paris,  5  in 
Berlin,  2  in  Brussels,  3  in  Amsterdam,  and  2  in  Vienna. 
These  symptoms  tend  to  show  that  the  lowering  of  rates  of 
discount  is  a  distinct  voucher  for  the  excess  of  the  supply  of 
lending  capital  over  the  demand.  Economists  agree  in  re¬ 
garding  them  as  indications  of  the  approach  of  a  lasting 
period  of  cheap  money. 

As  regards  investments,  these  are  mainly  dependent  upon 

favorable  or  unfavorable  economic  conditions,  as  during  a 

32 


498 


ECONOMIC  HISTORY. 


period  of  commercial  prosperity  there  would  naturally  be  a 
larger  amount  of  available  capital  to  invest  than  would  be  the 
case  were  depression  prevailing.  The  amount  of  capital  in¬ 
vested  in  the  formation  of  new  industrial  establishments  and 
various  forms  of  investment  would  afford  an  insight  into  the 
condition  of  the  industrial  position.  It  appears  from  a  state¬ 
ment  in  the  “  Moniteur  des  Int^rets  Materiels,”  in  an  article 
devoted  to  the  consideration  of  the  subject  of  investments, 
that  they  averaged  during  the  ten  years  ending  1879,  6,109 
million  marks,  the  amounts  for  the  years  1871-73  being  very 
considerably  above  the  average,  thus  clearly  indicating  the 
existence  of  a  period  of  excessive  speculation.  The  following 
statement  shows  the  amount  invested  each  year,  and  the 
character  of  the  investments  :  — 


[Millions  omitted.] 


Years. 

In  State  and 
City  Loans. 

In  Credit 
Institutions. 

In  Railways 
and  other  In¬ 
dustrial  Enter¬ 
prises. 

Total. 

Above  or  below 
the  Decennial 
Averages. 

1870 

•  • 

Murks. 

? 

Marks. 

'I 

Marks. 

1 

Marks. 

4560 

—  1549 

1871 

•  • 

9360 

1200 

2000 

12560 

+  6451 

1872 

•  • 

4380 

1564 

4166 

10110 

4-  4001 

1873 

•  • 

3470 

1396 

3856 

8722 

4  2613 

1874 

•  • 

1268 

236 

1864 

3368 

—  2741 

1875 

•  • 

372 

350 

646 

1368 

—  4741 

1876 

•  • 

2356 

66 

498 

2920 

—  3189 

1877 

•  • 

4618 

320 

1384 

6322 

4  213 

1878 

•  • 

2896 

126 

622 

3644 

—  2465 

1879 

•  • 

4406 

1902 

1212 

7520 

4  1411 

1880 

•  • 

1747 

1035 

1644 

4426 

—  1683 

1881 

•  • 

2395 

1033 

2315 

5743 

—  366 

1882 

•  • 

1075 

409 

2256 

3740 

—  2369 

1883 

•  • 

1253 

374 

1741 

3368 

—  2741 

1884 

•  • 

1446 

318 

2193 

3957 

—  2152 

1885 

•  • 

1181 

151 

1332 

2664 

—  3445 

In  this  comparison  the  proportion  of  investments  in  credit 
institutions,  banks,  railway  and  industrial  enterprises,  to  public 
loans  is  of  special  significance,  and  we  therefore  present  it 
by  per  centage  in  the  following  table :  — 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


499 


Years. 

Public 

Loans. 

Credit 

Institutions. 

Railways, 

etc. 

Percent 

Per  cent. 

Per  cent. 

1871.  . 

74*5 

9-5 

160 

1872 .  . 

43-5 

15-5 

410 

1873.  . 

400 

160 

440 

1874 .  . 

380 

7-0 

650 

1875.  . 

27-5 

25-75 

46-75 

1876 .  . 

80-75 

2-25 

170 

1877.  . 

7325 

50 

21-75 

1878.  . 

7925 

3-50 

17-25 

Years. 

Public 

Loans. 

Credit 

Institutions. 

Railways, 

etc. 

Percent. 

Per  cent. 

Per  cent. 

1879  . 

58-75 

2525 

160 

1880  . 

39-45 

23-38 

3717 

1881  . 

41-70 

17-99 

40-34 

1882  . 

28-74 

10-93 

60-31 

1883  . 

37-20 

11-10 

51-80 

1884  . 

36-54 

803 

55-43 

1885  . 

44-33 

5-67 

5000 

Here  we  perceive  that  in  the  early  period  of  speculation 
private^  enterprises,  and  in  the  subsequent  period  of  depres¬ 
sion  public  loans  received  the  larger  proportion  of  invest¬ 
ments.  After  the  revival  in  1879  the  relation  between  these 
two  classes  of  investments  is  once  more  reversed,  especially 
for  the  year  1882 ;  on  the  other  hand,  since  that  date  there 
would  appear  again  to  be  an  increase  of  public  loans. 

In  the  invested  capital  for  the  same  period  of  the  several 
individual  countries,  peculiarities  similar  to  those  which  char¬ 
acterize  the  preceding  tables  are  likewise  to  be  found.  Of  cap¬ 
ital  invested  in  the  English  market,  the  “  Economist  ”  gives 
the  following  statement :  — 


Years. 

Nominal. 

Actual. 

Years. 

Nominal. 

Actual. 

1870  .... 

Million  £. 

92-25 

Million  £. 

80  00 

1879  .... 

Million  £. 

56-47 

Million  £. 

47-46 

1872  .... 

151-55 

113-10 

1880  .... 

122-20 

77-60 

1873  .... 

154-70 

101-15 

1881  .... 

189-40 

115-25 

1874  .... 

114-15 

110-55 

1882  .... 

145-55 

94-65 

1875  .... 

62-65 

60-85 

1883  .... 

8115 

76-90 

1876  .... 

43-20 

42-85 

1884  .... 

10903 

90-60 

1877  .... 

51-50 

38-60 

1885  .... 

77-97 

77-87 

1878  .... 

69-20 

50-40 

- 

These  figures  may  be  taken  as  more  strictly  accurate  than 
those  affecting  the  total  investments,  as  they  relate  only  to 
a  single  stock  market ;  they  indicate,  moreover,  the  increase 
of  invested  capital  up  to  the  year  1874,  the  decrease  from 
this  period  till  1878,  and  the  rapid  recovery  since  1879 ;  like- 


500 


ECONOMIC  HISTORY . 


wise  the  character  of  the  recent  phase  from  1881  to  1885. 
This  statement  is  the  more  interesting,  as  we  can  estimate 
very  nearly,  by  the  proportion  between  the  nominal  and  effect¬ 
ive  capital,  whether  the  investments  were  of  a  purely  specu¬ 
lative  or  real  character.  In  France,  capital  invested  during 
the  first  six  months  of  1879  amounted  to  only  350  million 
francs,  as  compared  with  1,748  million  francs  in  the  corre¬ 
sponding  period  of  1880.  For  the  whole  year,  ending  30th 
June,  1880,  it  amounted  in  round  numbers  to  4,000  million 
francs,  and  this  is  exclusive  of  the  Belgian,  Austrian,  and 
Russian  loans,  which  were  not  directly  floated  on  the  Parisian 
market.  There  were  established  in  Paris,  in  the  year  1881, 
432  new  companies,  with  1,929  million  francs  of  capital ;  in 
the  year  1882,  328  companies, with  798  million  francs;  in  the 
year  1883,  230  companies,  with  251.5  million  francs ;  and 
in  the  year  1884,  only  143  companies,  with  91.9  million 
francs.  In  Germany  during  the  first  half  of  1879,  capital  to 
the  extent  of  only  142  million  marks  was  invested,  against 
659  million  marks  in  the  corresponding  period  of  the  ensuing 
year,  of  which  twenty-five  million  marks  only  were  in  railways 
and  other  companies,  and  the  remainder  in  foreign  loans.  In 
Austria  it  is  estimated  that  the  total  amount  of  invested  cap¬ 
ital  in  1880  was  only  170  million  florins,  compared  with  271 
million  florins  in  1879;  but  great  stress  is  here  laid  upon  the 
fact  that,  after  a  lengthened  period  of  inaction,  in  1880  money 
was  for  the  first  time  largely  invested  in  railways  and  commer¬ 
cial  enterprises,  in  preference  to  foreign  loans,  —  the  amount 
represented  by  the  former  being  fifty-four  million  florins. 
Thus,  as  may  be  gathered  from  the  preceding  observations, 
statistics  of  invested  capital  afford  an  important  symptom  of 
greater  or  less  commercial  activity. 

Again  wre  can  discover,  by  reference  to  financial  journals, 
the  fluctuations  which  have  appeared  in  the  dividends  paid 
by  railways  and  other  commercial  enterprises.  The  influence 
of  good  and  bad  years  exercised  over  these  dividends  is  clearly 
shown  in  the  comparative  statements  which  they  have  from 
time  to  time  published.  For  example,  the  depreciation  of 
foreign  stocks  on  the  London  Exchange  amounted  in  July, 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


501 


1873,  to  49.2  millions  sterling;  and  in  October,  1875,  the  loss 
was  estimated  by  the  Foreign  Loan  Committee  of  the  Stock 
Exchange  to  amount  to  as  much  as  157.8  millions  sterling. 
There  was  in  addition  the  loss  by  the  joint-stock  banks,  four¬ 
teen  of  whieh  alone,  in  1878,  suffered,  according  to  the 
“  Economist,”  a  diminution  in  the  value  of  their  stock  of  ten 
million  pounds  sterling.  As  regards  the  chief  industrial  estab¬ 
lishments  of  England  it  is  admitted  that  the  depreciation  in 
the  shares  of  the  cotton  spinning  and  weaving  industries  of 
Oldham  from  January,  1877,  to  1879,  represented  a  total  loss 
of  £1,360,000.  The  foregoing  figures,  however,  convey  only 
an  approximate  idea  of  the  general  loss  of  capital  in  Great 
Britain  and  Ireland,  the  actual  extent  being  statistically  un- 
ascertainable.  In  1880,  on  the  other  hand,  a  decided  improve¬ 
ment  took  place  in  the  United  Kingdom,  which,  when  compared 
with  the  period  of  depression  of  1879,  is  all  the  more  clearly 
marked.1 

As  Mr.  Giffen  points  out  in  the  Financial  and  Commercial 
History  of  1880,  published  in  the  “  Statist,”  the  increase  of 
selling  value  of  the  mass  of  securities  in  the  United  King¬ 
dom  would  probably  amount  to  not  less  than  600  millions 
sterling.  In  the  United  States  the  loss  in  railway  shares, 
from  1873  to  1877,  amounted  to  nearly  one  milliard  of  dollars, 
but  the  improvement  which  took  place  after  September,  1879, 
to  a  great  extent  made  up  this  loss,  as  in  May,  1880,  it  was 
already  reduced  to  200  million  dollars,  and  was  soon  after¬ 
wards  almost  entirely  removed.  A  similar  improvement  in 
the  value  of  securities  was  also  to  be  found  in  the  case  of 
Austria.  There  it  appeared  that  the  value  of  the  different 
description  of  securities,  which  amounted  in  1873  (May)  to 
1,589  million  florins  fell  to  755  in  1876 ;  in  1877  it  was  only 
879,  and  in  1878,  906  million  florins  ;  but  a  steady  improve¬ 
ment  then  set  in,  until  in  1880  the  total  increase  in  the  value 
of  all  securities  amounted  approximately  to  300  million 
florins.  This  favorable  tendency  continued  in  both  countries, 
as  in  Great  Britain,  until  the  close  of  1881,  after  which  a 
general  decline  in  securities  took  place  until  1885. 

i  See  “  Statist,”  Dec.  11,  1880,  for  full  details. 


502 


ECONOMIC  HISTORY. 


Statistics  of  bankruptcies  and  failures  may  likewise  be 
taken  as  unfailing  symptoms  of  the  industrial  position.  But 
our  information  as  regards  this  subject  is  by  no  means  com¬ 
plete,  owing  to  the  scarcity  of  official  data.  The  following 
table,  which  has  been  carefully  compiled  by  R.  Seyd,  serves, 
however,  to  indicate  the  economic  phases  from  1870-1884  in 
the  United  Kingdom  by  the  number  of  failures  :  — 


Tears. 

Number. 

Years. 

Number. 

1870  . 

8,151 

1878  . 

15,059 

1871 . 

8,164 

1879  . 

16,637 

1872  . 

8,112 

1880  . 

13,147 

1873  . 

9,064 

1881 . 

12,005 

1874  . 

9,250 

1882  . 

11,019 

1875  . 

9,194 

1883  . 

10,599 

1876  . 

10,848 

1884  . 

14,394 

1877  . 

11,022 

1885  . 

5,089 

It  is  noteworthy  that  the  extreme  depression  of  the  large 
industries  in  Great  Britain  was  already  relieved  in  1878, 
whereas  of  the  smaller  trades  not  until  1879.  As  regards  the 
United  States  the  periods  of  commercial  activity  and  of  depres¬ 
sion  are  clearly  perceptible  in  the  statistics  of  failures  pub¬ 
lished  by  Messrs.  Dun,  Wiman,  &  Co.  According  to  these 
returns,  the  smallest  number  of  failures  in  the  Union  is  to  be 
found  in  the  years  1869-1872;  a  depression  begins  in  the 
latter  half  of  1878,  which  steadily  increases  until  1878;  and 
the  years  1879-1881  witness  a  genuine  revival.  The  yearly 
average  of  the  number  of  failures,  and  the  amount  of  liability, 
in  the  different  periods  is  as  follows  :  — 


Yearly  Average. 

Number  of 
Failures. 

Amount  of 
Liabilities. 

1866-1872  . 

2,889 

$83,000,000 

1873-1878  . 

7,886 

200,000,000 

1879-1884  . 

7,311 

124,000,000 

1  The  years  1884  and  1885.  cannot  be  compared  with  the  preceding  years, 
owing  to  the  enactment,  on  25th  Aug.,  1883,  of  a  new  and  more  stringent  bank¬ 
ruptcy  act. 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


503 


In  France  the  movement  is  not  so  strikingly  accentuated,  as 
that  country  was  less  affected  by  the  crisis  of  1873 ;  yet  the 
fluctuations  were  considerable.  Thus  in  1872  the  number  of 
declared  bankrupts  amounted  to  5,306,  and  the  extent  of  their 
failures  was  represented  by  a  total  of  215  million  francs  ;  in 
1873,  5,508,  liabilities  218  millions ;  in  1874,  5,596,  liabil¬ 
ities  241  millions;  in  1875,  5,361,  liabilities  246  millions,  and 
in  1876,  5,193,  liabilities  298  millions.  It  was  not  until  1877 
that  any  real  improvement  was  visible ;  and  in  1881,  though 
there  were  6,795  failures,  the  amount  of  liabilities  was  only 
236  million  francs.  Finally,  in  Austria,  according  to  the  pub. 
lished  returns,  the  number  of  insolvents  in  1875  was  1,381 ;  in 
1876,  1,777;  in  1877,  1,377;  in  1878,  1,334;  in  1879, 1,048; 
and  in  1880  only  971  failures.  The  amount  of  debt  in  1876 
was  established  at  nearly  twenty-six  million  florins;  in  1877 
at  thirteen  millions,  and  in  1878  at  about  fourteen  millions. 

The  intimate  connection  between  the  economic  and  social 
conditions  demands  no  extended  proof.  The  bonds  of  union 
between  these  two  phases  of  life  are  so  numerous  that  we 
proceed  directly  to  a  statistical  presentation  of  a  series  of 
phenomena  which  we  have  termed  reflective  symptoms,  inas¬ 
much  as  they  reveal  the  reactions  of  a  greater  or  lesser  degree 
of  economic  prosperity  in  a  nation  or  period. 

We  here  look  first  into  the  condition  of  the  working  classes, 
and  we  find  that  during  the  favorable  period,  1870-73,  com¬ 
plaints  of  want  of  employment  were  almost  unknown,  whereas 
the  demand  for  labor,  on  the  contrary,  was  great  and  wages 
were  high ;  but  in  1874  there  came  a  change,  the  hours  of 
labor  were  reduced,  and  workmen  were  discharged  in  great 
numbers.  This  was  particularly  exemplified  in  the  years 
1876-77,  when  the  conditions  of  trade  were  most  unfavorable, 
and  it  was  especially  noticeable  in  England  and  the  majority 
of  the  continental  countries.  In  America,  moreover,  in  the 
beginning  of  1877,  it  is  estimated  that  the  number  of  work¬ 
men  totally  unemployed  amounted  to  half  a  million,  and 
about  an  equal  number  worked  only  one  or  two  days  a  week. 
At  the  end  of  1877  the  trades  union  committee  gave  the  num¬ 
ber  of  unemployed  workmen  as  two  millions.  These  com- 


504 


ECONOMIC  HISTORY. 


plaints  began  to  cease  about  the  middle  of  1879,  first  in  the 
United  States  and  soon  afterwards  in  England  and  Western 
Europe.  From  the  data  respecting  the  condition  of  labor 
in  mining,  textile,  and  other  industries  for  1880  it  may  be 
safely  affirmed  that  the  state  of  labor  had  then  everywhere 
again  materially  improved.  In  the  American  Union,  in  par¬ 
ticular,  there  was  a  great  demand  for  laborers,  which  contin¬ 
ued  throughout  the  years  1881-88,  and  then  again  declined. 

Strikes,  likewise,  afford  a  characteristic  symptom  of  the 
state  of  the  labor  market,  not  only  by  their  numbers  and 
duration,  but  also  by  the  manner  in  which  they  terminate, 
whether  in  favor  of  the  employers  or  the  employed.  On  this 
general  subject  English,  American,  French,  and  Belgian  sta¬ 
tistics  afford  valuable  information.  As  regards  Great  Britain, 
Mr.  G.  Phillips  Be  van,  in  a  very  interesting  report,  has  given 
a  comparative  statement,  as  follows,  showing  the  number  of 
strikes  which  took  place  in  the  years  1870-79 :  — 


Years. 

Number  of 
Strikes. 

Years. 

p 

Number  of 
Strikes. 

1870  . 

30 

1875  . 

245 

1871 . 

98 

1876  . 

229 

1872  . 

343 

1877  . 

180 

1873  . 

365 

1878  . 

268 

1874  . 

286 

1879  . 

308 

The  greatest  number  of  strikes  during  this  period  occurred 
in  1872-78,  and  happened  at  a  time  when  industry  was  at  its 
highest.  There  was  then  a  very  large  demand  for  labor,  and 
a  great  inflation  in  prices,  and  although  men  were  getting 
good  wages,  yet  they  were  not  satisfied.  Though  the  gener¬ 
ality  of  them  were  earning  more  than  they  had  ever  earned 
before,  they  struck  for  a  reduction  of  working  hours.  This  was 
the  reason  for  very  many  of  the  strikes  which  occurred  at  that 
time.  The  effort,  on  the  other  hand,  of  the  masters  to  win 
back  the  extra  hour  they  were  obliged  to  concede  in  1872-78, 
affords  an  explanation  of  the  large  number  of  strikes  in  1879. 
In  that  year  the  greatest  number  of  strikes  occurred  in  the 
building  trade  (598),  the  metal  trades  (890),  mining  indus- 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


505 


tries  (339),  and  textile  industries  (440),  which  establishes  be¬ 
yond  a  doubt  their  symptomatic  connection  with  the  economic 
situation.  The  improvement  in  the  economic  condition,  and 
the  extension  of  raw  production,  increased,  beyond  what  could 
otherwise  have  been  expected,  the  demands  for  higher  wages, 
and  the  number  of  strikes  in  1881-82.  In  America,  as  well 
as  in  England,  the  years  in  which  the  activity  in  commercial 
enterprises  was  greatest,  were  characterized  by  the  largest 
number  of  strikes,  —  for  example,  1871-72.  During  this 
period  there  was  a  cessation  of  work  in  the  anthracite  coal 
mines  of  Pennsylvania,  by  which  90,000  workmen  were  put 
on  half  time.  Strikes  in  the  coal  regions  continued,  indeed, 
in  the  years  1874  and  1875;  but  the  second  period  of  their 
occurrence  in  remarkable  numbers  was  not  reached  until 
1876-77.  This  was  a  period  of  great  distress,  during  which 
wages  were  reduced,  and  hands  were  discharged.  There 
resulted  in  consequence  one  of  the  most  unfortunate  strikes 
that  ever  took  place  in  America.  It  occurred  in  the  State  of 
Pennsylvania,  and  culminated  in  open  revolt  and  bloodshed. 
Then  followed  the  strike  on  the  Baltimore  and  Ohio  Rail¬ 
way,  which  was  also  of  a  very  serious  nature.  From  1870 
to  1880  the  social  tension  was  again  relaxed ;  and  with  the 
revival  in  the  years  1881  and  1882  the  strikes  also  increased, 
especially  among  the  laborers  in  the  coal  mines,  iron  works, 
and  kindred  industries  of  the  Southeast.  Both  at  this  time 
and  in  1883  the  ends  of  the  workmen  were  thereby  attained. 
In  1884  and  1885,  however,  the  strikes  in  America  have  been 
chiefly  characterized  by  their  futility.  In  France,  Belgium, 
and  Germany  similar  symptoms  of  the  economic  situation 
are  not  lacking,  but  they  appear  in  a  less  marked  degree. 
The  recent  phases  of  socialism  and  social-communism  in  those 
countries  are  an  expression  of  the  changing  situation  and  a 
reflex  of  their  economic  condition.  With  the  improvement  of 
the  latter  the  influence  of  socialistic  leaders  must  diminish. 

In  connection  with  the  subject  of  strikes  and  workmen’s 
wages  we  must  not  omit  to  give  a  passing  glance  at  the  effect 
which  the  peculiar  conditions  of  the  labor  market  have  upon 
immigration  and  emigration.  In  consequence  of  the  increased 


506 


ECONOMIC  HISTORY. 


facilities  for  emigration  this  is  a  subject  which  has  attained 
a  vast  importance,  and  may  be  classed  as  one  of  the  relevant 
symptoms  of  the  economic  position.  The  great  centre  of  at¬ 
traction  for  those  leaving  the  more  densely  populated  of  the 
European  countries  appears  to  be  the  United  States.  As  we 
have  already  pointed  out  there  have  been  very  many  changes 
in  the  conditions  of  commercial  activity  during  the  period 
under  our  consideration.  The  effect  these  changes  have  had 
upon  immigration  into  the  United  States  may  first  be  seen  in 
the  speculative  era  from  1871  to  1878,  when  there  was  a  very 
great  influx  of  immigrants.  Then  in  1874-78  the  powerful 
attractions  which  induced  such  vast  numbers  to  migrate  were 
wanting;  consequently  we  find  at  that  time  a  considerable 
decrease  in  these  numbers.  In  1879,  with  the  return  of  pros¬ 
perity,  there  again  appeared  an  increase  in  immigration.  This 
attained  its  maximum  in  1881-82,  after  which  occurred  a 
decline,  owing  to  the  diminishing  opportunities  of  labor  and  a 
more  critical  state  of  affairs  in  the  New  World.  The  official 
statistics  of  the  movement  are  as  follows :  — 


Years  Ending  30th  June. 

Number  of 
Immigrants. 

Years  Ending  30th  June. 

Number  of 
Immigrants. 

1870-71 

321,350 

1878-79  . 

177,826 

1871-72  . 

404,806 

1879-80  . 

457,257 

1872-73  . 

459,803 

1880-81  . 

669,431 

1873-74  . 

313,339 

1881-82  . 

788,992 

1874-75  . 

227,498 

1882-83  . 

603,322 

1875-76  . 

169,986 

1883-84  . 

518,592 

1876-77  . 

141,857 

1884-85  . 

395,346 

1877-78  . 

0 

138,469 

In  this  stream  of  American  immigration  the  largest  num¬ 
ber  of  persons  is  uniformly  supplied  by  Germany,  and  next 
to  it  by  Great  Britain  and  Ireland.  By  reference  also  to 
the  emigration  returns  of  the  other  European  countries  we 
discover  a  uniformity  of  movement  in  corresponding  years 
that  can  only  be  explained  upon  similar  economic  grounds. 
According  to  these  statistics  it  can  thus  be  affirmed  in  gen¬ 
eral  of  Europe,  as  has  been  demonstrated  by  Mr.  Giffen  for 
Great  Britain  in  particular,  that  an  increase  of  emigration 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


507 


is  to  be  regarded  as  characteristic  of  a  period  of  economic 
prosperity,  and  the  reverse  as-  indicative  of  a  period  of 
economic  depression. 

Another  and  very  interesting  symptom  of  the  conditions  of 
material  prosperity  lies  in  the  movement  (Bewegung)  of  the 
population.  The  variations  in  the  number  of  births,  deaths, 
and  marriages  afford  clear  indications  of  the  favorable  or  un¬ 
favorable  conditions  of  the  years  in  which  they  occur.  Mar¬ 
riages  especially  would  appear  to  be  a  most  important  element 
in  determining  the  economic  condition  in  different  years.  It 
will  readily  be  conceded  that  an  increase  or  decrease  in  the 
number  of  these  point  conclusively  to  the  existence  of  mate¬ 
rial  ease  or  the  reverse.  In  dealing  with  this  subject  for  the 
assigned  period  we  find  that  the  years  1870-73  were  char¬ 
acterized  by  a  very  marked  increase  in  the  number  of  mar¬ 
riages,  thereby  indicating  the  existence  of  favorable  conditions 
and  confidence  in  a  time  of  increased  prosperity.  This  in¬ 
crease  was  particularly  noticeable  in  Great  Britain,  Germany, 
France,  Belgium,  Austro-Hungary,  and  Holland.  With  the 
unfavorable  reaction  of  1873  and  1874,  on  the  other  hand,  the 
number  of  marriages  in  all  these  countries  began  to  decrease. 
In  Italy,  Switzerland,  Norway,  and  Denmark,  the  economic 
reaction  was  likewise  similarly  manifested ;  but  corresponding 
to  a  later  maximum  in  the  frequency  of  marriages,  the  de¬ 
crease  occurred  not  until  1877-78.  At  the  close  of  1879 
increasing  confidence  was  here  and  there  again  slightly  per¬ 
ceptible  in  the  number  of  marriages.  In  their  greater  fre¬ 
quency,  however,  during  the  years  1880  and  1881,  in  England, 
France,  Austria,  and  Italy,  we  discover  decided  and  powerful 
symptoms  of  the  improved  economic  and  social  conditions. 
In  the  United  States,  where  as  a  whole  this  relation  ought  to 
be  most  apparent,  it  is  only  to  be  proven  statistically  in 
particular  States ;  but  this  detached  evidence  from  Massa¬ 
chusetts,  Connecticut,  and  Rhode  Island,  shows  the  most  strik¬ 
ing  effects  of  the  changing  prosperity  of  the  last  twelve  years 
upon  the  frequency  of  marriages.  The  favorable  and  unfavor¬ 
able  conditions  of  life  are  not  so  strikingly  manifested  in  the 
“movement”  of  population  as  regards  births  and  deaths  as  in 


508 


ECONOMIC  HISTORY. 


the  case  of  marriages.  In  the  births,  however,  a  considerable 
diminution  is  to  be  found,  beginning  with  the  year  1877  or 
1878  and  continuing  until  the  year  1881  or  1882.  In  the 
majority  of  European  countries  the  death  rate  was  likewise 
highest  in  those  years  in  which  the  birth  rate  was  lowest. 
The  years  of  depression  thus  appear  not  to  have  seriously 
affected  at  the  time  the  entire  growth  of  the  population,  but 
the  after  effects  were  undoubtedly  felt  in  1879-80.  The  crisis 
of  1873,  however,  had  a  direct  and  unmistakable  influence  on 
the  number  of  suicides.  M.  Jocliniek  states  that  in  twenty -two 
European  countries  the  number  of  suicides  increased  from  99 
in  every  million  of  inhabitants  during  the  quinquennial  period 
1871-75  to  119  per  million  in  the  period  1876-80.  M.  A.  von 
Oettingen,  taking  another  group  of  twenty  European  countries, 
gives  also  the  following  statement  of  the  increase  of  suicides 
in  successive  quinquennial  periods  between  1870  and  1878  :  — 


Years. 

Number 

of 

Suicides. 

Proportion 
per  Million 
Inhabitants. 

1870-1874  . 

20,306 

80 

1871-1875  . 

20,208 

80 

1872-1876  . 

21,638 

85 

1873-1877  . 

23,654 

92 

1874-1878  . 

24,910 

97 

The  fact,  however,  must  not  be  overlooked  that  statistics  re¬ 
lating  to  suicides  must  necessarily  be  incomplete,  as  on  this 
subject  it  is  almost  impossible  to  obtain  reliable  data,  owing  to 
omissions.  Statistics  of  mendicity  and  crime  likewise  afford 
abundant  proof  that  good  and  bad  times  make  their  influence 
felt  in  a  very  perceptible  manner  in  the  domain  of  social  life. 
They  are  consequently  an  additional  and  corroborative  symp¬ 
tom  of  economic  progress  or  retrogression. 

It  is,  then,  by  all  the  symptoms  which  we  have  enumerated 
that  we  have  endeavored  to  estimate  the  world’s  prosperity; 
and  these  have  unquestionably  proved  that  in  the  period  from 
1870  to  1885  economic  conditions  have  been  exposed  to 
greater  and  more  varying  fortunes  than  they  had  ever  before 


PROGRESS  IN  TRADE  AND  INDUSTRY. 


509 


experienced.  At  the  commencement  of  the  period  there  were 
unmistakable  signs  of  an  increase  in  wealth  almost  without 
parallel  in  commercial  annals ;  afterwards  for  a  number  of 
years  there  were  apparent  a  sensible  decline  in  wealth  and 
an  enormous  reduction  of  profit ;  and  again,  dating  from 
the  middle  of  1879,  there  were  signs  of  renewed  commercial 
activity,  a  fresh  impetus  was  given  to  trade,  investments  were 
found  for  capital  hitherto  unemployed,  workmen  were  in 
greater  demand,  wages  were  good,  a  very  marked  improve¬ 
ment  was  to  be  seen  not  only  in  the  European  but  also  on  the 
American  exchanges,  and  in  fact  there  was  a  general  revival 
in  all  branches  of  trade  and  industry.  This  revival  continued 
until  the  close  of  1882  or  the  middle  of  1883,  after  which 
economic  symptoms  again  indicated  a  period  of  depression 
for  1884  and  1885.  The  recent  years  of  economic  advance 
must  be  a  convincing  proof  to  those  pessimists  who  took  such 
a  desponding  view  of  the  situation,  that  their  fears  as  to  the 
ultimate  improvement  in  material  prosperity  were  altogether 
groundless.  Who  is  there  who  still  believes  in  the  hypothesis 
that  the  depression  of  1874-78  marked  the  termination  of 
commercial  and  industrial  prosperity  ?  Who  now  believes 
that  the  crisis  of  1873  marked  a  new  era,  and  that  the  highest 
point  which  improvements  in  trade  and  industry  could  reach 
had  been  attained  ?  Who  in  like  manner  will  now  share  the 
pessimist  view  of  the  present  depression  that  in  the  future  a 
very  great  decrease  of  prosperity  is  to  be  looked  for  before  the 
increase  is  to  be  expected  ?  Past  experience  must  give  ground 
for  confidence  in  a  new  revival  in  the  economic  life  of  the 
present,  and  in  a  still  greater  increase  of  prosperity  for  the 
future.  Who  can  predict  what  wonderful  inventions  may  yet 
be  in  store  for  us,  —  what  improvements  electricity,  for  in¬ 
stance,  may  effect  in  the  future  ?  Who  can  gainsay  the  im¬ 
provements  which  are  continually  being  brought  to  bear 
upon  machinery  ?  In  looking  at  the  wonderful  strides  with 
which  cultivation  and  improvement  have  been  advancing, 
who  can  fail  to  be  impressed  with  a  sense  of  their  vast¬ 
ness  and  of  their  very  great  importance  ?  All  these  point 
to  the  inauguration  of  a  new  and  even  brighter  era  in  econ- 


510 


ECONOMIC  HISTORY. 


omic  life.  And  although  we  are  of  the  opinion  that  the 
characteristics  of  the  ensuing  economic  period  may  differ  ma¬ 
terially  from  those  which  marked  the  preceding  one,  yet  after 
a  patient  study  of  the  facts  in  connection  with  the  present 
situation,  we  can  by  no  means  look  forward  to  a  period  of  con¬ 
tinued  depression.  While  it  may  readily  be  concluded  from 
the  symptoms  of  the  existing  depression  that  the  next  revival 
is  not  to  be  expected  with  great  precipitancy,  yet  the  more 
slowly  and  more  gradually  the  disturbed  equilibrium  between 
production  and  consumption,  between  prices  and  wages,  and 
between  interest  upon  capital  and  profits  of  investments  is 
adjusted,  so  much  the  greater  is  the  guarantee  for  the  perma¬ 
nent  consolidation  of  economic  life. 


ENGLISH  FINANCES. 


511 


XVIII. 

ENGLISH  FINANCES,  1887-1887. 

LEONARD  H.  COURTNEY. 

From  the  Reign  of  Queen  Victoria.1  Edited  by  Thomas 
Humphry  Ward.  Vol.  I.,  pp.  330-354. 

A  SURVEY  of  the  financial  experiences  of  the  first  years 
of  the  reign  of  the  Queen  must  afford  some  comfort 
to  those  who  have  to  deal  with  the  finances  of  the  kingdom 
to-day.  As  those  years  passed  the  prospect  was  not  indeed 
inspiriting.  On  the  contrary,  it  was  calculated  to  develop 
the  deepest  gloom.  The  first,  the  essential,  condition  of 
good  finance  was  wanting.  Every  successive  year  was 
marked  by  a  deficiency  of  income  to  meet  the  demands  of 
the  public  service.  This  was  not  due  to  any  indulgence  in 
extraordinary  expenditure.  No  large  works  of  a  permanent 
character  were  undertaken,  such  as  might  justify  the  post¬ 
ponement  of  payment  of  part  of  their  cost  to  later  years. 
No  sudden  necessity  of  war  or  warlike  preparation  compelled 
a  Chancellor  of  the  Exchequer  to  consent  to  immediate  outlay, 
and  to  bethink  himself  afterwards  how  it  should  be  met. 
The  calls  of  this  nature  which  arose  were  such  as  must 
always  be  expected  in  an  extended  empire,  and  ought  not 
to  have  embarrassed  a  Finance  Minister.  The  annual  expen¬ 
diture  of  the  nation  was  normal  and  ordinary.  It  was, 
moreover,  moderate  —  not  by  comparison  with  the  totals  of 
later  years,  but  when  set  beside  the  burden  of  the  generation 
immediately  preceding.  The  functions  of  the  national  Gov¬ 
ernment  were  narrowly  restricted.  The  spirit  of  economy 
animated  successive  Administrations.  If  there  was  any  ten- 


1  London:  Smith,  Elder  &  Co.,  1887, 


512 


ECONOMIC  HISTORY. 


dency  to  outlay  on  the  part  of  his  colleagues  —  and  it  is 
believed  there  was  then  very  little  —  the  Chancellor  of  the 
Exchequer  curbed  it,  and  provided,  as  he  hoped,  sufficient 
means  of  revenue  to  meet  the  anticipated  expenditure.  Yet 
the  following  is  the  record  of  the  results  of  these  years : 


Income 

Expenditure 

£ 

£ 

Year  to  Jan.  5,  1838  . 

.  .  50,419,134 

51,145,304 

u 

1839  . 

.  .  51,310,006 

51,654,000 

u 

1840  . 

.  .  51,850,139 

53,381,258 

(( 

1841  . 

.  .  51,684,766 

53,244,494 

u 

1842  . 

.  .  52,228,320 

54,314,844 

We  have  here  a  perpetually  recurring  deficit  as  the  first  evil 
fact  of  financial  administration  at  the  commencement  of 
the  reign.  If  we  proceed  to  inquire  how  the  income,  inade¬ 
quate  as  it  was,  was  raised,  we  may  light  upon  what  we  now 
believe  to  be  an  explanation,  more  or  less  complete,  of  the 
recurring  deficiency  in  the  revelation  of  the  characteristics 
of  the  existing  taxing  system.  Taking  the  middle  year  of 
the  five  of  which  the  figures  have  been  given  —  that  ending 
on  January  5,  1840  —  we  find  the  income  thus  imposed: 


£ 

Customs .  23,387,269 

Excise  .  14,871,597 

Stamps .  7,353,819 

Land  and  Assessed  Taxes,  &c.  .  4,164,877 

Post  Office . 1,324,342 

Crown  Lands .  167,500 

Miscellaneous .  415,362 


From  which  it  appears  that  almost  exactly  three-fourths  of 
the  revenue  raised  in  the  year  were  derived  from  the  duties 
of  customs  and  excise.  This  is  enough  to  suggest  a  doubt 
of  the  justice  of  the  financial  system  as  regards  the  reparti¬ 
tion  of  the  national  burden  among  the  different  classes  of 
the  community.  Although  the  pressure  of  indirect  taxes 
becomes  shifted  and  adjusted  in  the  process  of  distribution, 

so  that  it  is  alwavs  difficult  to  trace  the  ultimate  incidence  of 

•> 

the  levy  —  and  there  is  some  plausibility  in  the  suggestion 


ENGLISH  FINANCES. 


513 


that  in  the  end  the  burden  reaches  each  back  according  to  its 
capacity  to  bear  it  —  yet  we  cannot  doubt  that  of  the  amount 
thus  annually  raised,  even  if  we  regarded  for  the  moment 
nothing  but  the  sums  actually  extracted  from  the  taxpayers, 
too  large  a  share  came  from  those  who  consumed  the  mass 
of  dutiable  articles,  whether  of  customs  or  excise.  But  a 
statement  of  the  proportion  of  the  revenue  derived  from 
indirect  taxation  is  an  extremely  partial  revelation  of  the 
truth.  We  must  inquire  upon  what  commodities  duties  of 
excise  and  customs  were  levied.  The  excise  still  extended 
to  such  articles  as  soap,  glass,  bricks,  and  paper,  and  included 
a  newspaper  duty.  To  protect  the  revenue  thus  raised  con¬ 
stant  supervision  of  each  trade  was  necessary,  restricting  the 
exercise  and  limiting  the  development  of  all  of  them,  whilst 
tending  to  foster  monopolies  in  the  hands  of  those  engaged 
in  each  industry.  Strict  regulations  directed  the  processes 
of  manufacture,  and  improvements  were  hampered  by  the 
necessity  of  inducing  the  co-operation  of  the  excise  depart¬ 
ment  in  any  transformation  of  the  mode  of  production.  The 
duties  on  bricks  and  glass  may  be  especially  instanced  as 
far-reaching  in  their  effects  on  other  trades  besides  those 
primarily  concerned,  and  architecture  itself  suffered  from 
limited  and  stereotyped  forms  of  manufacture.  But  the 
customs  duties  were  worse.  Upwards  of  1,200  articles  were 
included  in  the  tariff,  and  many  of  them  not  for  the  purpose 
of  bringing  money  into  the  Exchequer,  but  in  order  to  com¬ 
pel  people  to  buy  dearly  at  home  what  they  could  have  got 
cheaply  from  abroad.  The  express  object  of  many  of  the 
duties  was  an  absolute  prohibition  of  importation ;  and,  even 
where  some  foreign  trade  survived,  it  was  on  a  reduced  and 
limited  scale,  and  potential  consumers  were  debarred  the 
cheap  satisfaction  of  their  desires  without  any  gain  either 
to  the  Exchequer  or  to  a  home  manufacture.  The  unpro¬ 
ductiveness  of  many,  or  rather  of  most,  of  the  customs  duties 
was  in  truth  their  recommendation  to  those  who  approved 
of  them. 

Out  of  the  1^200  articles  in  the  tariff,  nine  did  in  fact 

contribute  seven-eights  of  the  revenue  received.  Tea,  sugar, 

33 


514 


ECONOMIC  HISTORY. 


tobacco,  spirits,  wine,  timber,  corn,  coffee,  and  cotton  wool 
made  up  the  large  proportion  of  the  whole.  Out  of  these, 
five,  tea,  sugar,  tobacco,  spirits,  and  corn,  were  the  most  pro¬ 
ductive,  yielding  just  two-thirds  of  the  total  customs  revenue 
—  all  articles  of  practically  universal  consumption ;  while  in 
the  case  of  corn,  the  effect  of  the  duty  was,  and  was  intended 
to  be,  the  raising  of  the  price  of  the  corn  produced  at  home 
for  the  benefit  not  of  the  Exchequer,  but  of  the  persons  in 
possession  of  the  prime  material  of  its  production,  corn¬ 
growing  land.  In  the  same  way  differential  duties  on  sugar 
and  on  timber  taxed  the  home  consumer  in  order  to  confer 
a  bonus  on  colonial  producers.  The  tariff  was  tainted 
with  injustice  in  its  most  lucrative  items,  and,  apart  from 
injustice,  it  was  almost  everywhere  open  to  the  charge 
of  impolicy.  The  import  duty,  or  rather  import  duties, 
on  wood  burdened  all  industries.  It  is  scarcely  intelligible 
upon  what  grounds  an  import  duty  on  cotton  was  defended. 

No  manufacture  was  too  insignificant  to  escape  the  notice 
of  the  officers  of  the  customs,  and,  although  it  was  a  primary 
object  to  prevent  the  importation  of  the  manufactures  of 
other  nations,  the  hand  of  the  collector  was  heavy  upon  raw 
materials,  so  as  to  weigh  down  the  development  of  manu¬ 
factures  at  home.  And,  to  crown  all,  the  prospect  of  a 
better  policy  seemed  to  recede  rather  than  to  advance.  In 
the  unreformed  Parliament  before  1832  there  had  been  a 
strong  demand  for  fiscal  improvement.  The  petition  of  the 
London  merchants  had  been  presented  to  Parliament  as  early 
as  1821,  and  Lord  Liverpool  had  expressed  an  abstract 
approval  of  its  principles.  Mr.  Huskisson  had  shown  a 
readiness  to  carry  abstract  approval  into  practice.  In  1828 
Sir  Henry  Parnell  had  obtained  a  Committee  on  financial 
reform,  and,  although  it  never  reported,  he  himself  tabulated 
the  conclusions  to  which  its  inquiries  led  in  favor  of  large 
remissions  of  taxation,  including  the  abolition  of  all  taxes  on 
the  raw  materials  of  manufactures,  and  the  imposition  of  a  prop¬ 
erty  and  income  tax  to  make  good  any  consequent  deficiency. 
But  the  reform  of  Parliament  did  not  apparently  develop 
any  further  movement  towards  fiscal  reform  and  the  libera- 


ENGLISH  FINANCES. 


515 


tion  of  trade.  The  new  electors  were  restive  under  direct 
taxes,  and  agitated  for  an  abolition  of  house  duties  and  win¬ 
dow  tax,  but  acquiesced  in  indirect  taxation. 

The  recovery  of  strength  by  the  Conservative  party  boded 
no  good,  bound  up  as  that  party  was  with  the  maintenance 
of  the  Corn  Duties ;  nor  could  those  who  remembered  Sir 
Robert  Peel’s  strenuous  opposition  to  Lord  Althorp’s  attempt 
to  reduce  the  timber  duties  expect  much  assistance  from 
him  towards  financial  reform.  Such  was  the  situation  in  the 
earlier  years  of  the  reign.  An  inadequate  revenue ;  a  system 
of  taxation  pressing  disproportionately  upon  the  means  of 
the  poor,  but  injuring  the  industrial  classes  still  more  in  the 
way  it  tied  and  bound  the  processes  of  manufacture  and 
restricted  the  exchanges  of  commerce ;  and  an  increasing 
certainty  of  the  approaching  accession  to  power  of  the  politi¬ 
cal  party  whose  bond  of  union  was  the  maintenance  of  those 
import  duties  which  had  the  worst  characteristics  of  civic 
injustice  and  financial  impolicy. 

Sir  Robert  Peel  entered  into  office  immediately  after  the 
reassembling  of  Parliament  upon  the  general  election  of 
1841 ;  but  he  spent  the  winter  in  elaborating  his  plans  and 
in  familiarizing  his  colleagues  with  them,  and  it  was  not 
until  the  session  of  1842  that  he  explained  his  policy  to  the 
House  of  Commons.  He  dealt  first  with  the  Corn  Laws,  pro¬ 
posing  to  substitute  a  less  severe  sliding  scale  for  that  in  exist¬ 
ence.  Lord  John  Russell  and  the  Whig  party  had  adopted 
the  policy  of  a  moderate  fixed  duty  ;  and  against  them  Sir 
Robert  argued  that  such  a  duty  could  not  be  maintained  if 
the  price  of  corn  became  high,  and  that,  once  withdrawn  in 
deference  to  pressure,  it  could  not  be  reimposed.  His  own 
sliding  duty  would  vanish  and  reappear  automatically  without 
recourse  to  legislation,  and  without  the  intervention  of  the 
Executive  Government.  Against  Mr.  Yilliers,  Mr.  Cobden, 
and  the  advocates  of  unconditional  repeal,  he  urged  the  policy 
of  maintaining  such  a  supply  of  corn  at  home  as  could,  in 
circumstances  of  visitation,  be  expanded  without  great  diffi¬ 
culty  into  a  sufficiency  for  the  whole  population.  It  is  note¬ 
worthy  that  of  pure  Protection  he  spoke  little  ;  nor  did  he 


516 


ECONOMIC  HISTORY. 


dwell  on  the  supposed  sufferings  of  the  ill-used  race  of  men 
that  cleave  (or  own)  the  soil ;  and  the  sturdier  advocates  of 
Protection  were  justified  in  suspecting  his  steadfastness. 
Their  suspicions  must  have  increased  when  the  Budget  was 
unfolded.  Sir  Robert  Peel  proposed  the  reimposition  of  the 
income  tax  for  a  limited  period,  and  he  appealed  strongly  to 
persons  of  means  to  emulate  the  civic  zeal  of  their  fathers  by 
accepting  cheerfully  a  sacrifice  necessary  for  the  re-establish- 
ment  of  public  credit.  His  adjurations  to  his  hearers  to  re¬ 
store  the  equilibrium  of  income  and  expenditure  were  so 
earnest  that  this  aim  has  been  sometimes  represented  as  the 
sole  motive  of  his  policy.  It  is  not  easy  to  say  with  decision 
how  far  his  mind  had  advanced  in  the  spring  of  1842  —  most 
probably  he  did  not  know,  and  certainly  he  did  not  tell  him¬ 
self— but  his  Budget  contained  two  perfectly  independent 
branches,  and  besides  proposing  the  income  tax  as  a  means 
of  equilibrium,  he  recommended  a  large  reform  of  the  tariff 
in  the  interest  of  trade.  His  reductions  affected  750 
articles  out  of  the  1,200  in  the  tariff,  and  his  aim  was  to 
make  the  duties  on  raw  materials  nearly  nominal  and  to  re¬ 
duce  those  on  partially  manufactured  materials,  while  on 
fully  manufactured  articles  the  duty  was  not  to  exceed  20  per 
cent. 

The  income  tax  was  imposed  for  three  years ;  but  1842  was 
already  too  far  spent  to  allow  the  attainment  within  it  of  the 
equilibrium  Sir  Robert  Peel  desired.  The  experience  of  the 
years  that  immediately  followed  attested  his  success,  although 
further  remissions  had  been  made  : 


Expenditure 


Income 

£ 


£ 


Year  to  Jan.  5,  1844  .  .  .  56,806,081 
“  1845  .  .  .  58,302,812 


55,360,511 

54,840,518 


and  when  he  met  Parliament  in  1845,  he  was  encouraged  to 
essay  a  further  flight.  The  period  of  the  tax  was  expiring ; 
but  he  asked  leave  to  renew  it  for  another  three  years,  and, 
this  time,  avowedly  in  the  interests  of  an  invigorated  com¬ 
merce.  His  recommendations  prevailed.  The  tariff  was 
absolutely  cleared  of  450  items,  chiefly  raw  materials  ;  all  ex- 


ENGLISH  FINANCES. 


517 


port  duties  were  swept  away,  and  the  excise  on  glass  abolished. 
There  could  no  longer  be  any  doubt  as  to  the  meaning  of  Sir 
Robert  Peel’s  policy,  but  the  year  1845  was  to  be  signalized 
by  an  open  abandonment  of  the  Corn  Duties  themselves.  The 
failure  of  the  potato  crop  precipitated  a  famine  in  Ireland, 
before  which  the  necessity  of  maintaining  a  measure  of  self¬ 
subsistence  in  respect  of  food  within  the  United  Kingdom 
crumbled  away,  and  in  the  spring  of  1846  Sir  Robert  Peel 
proposed  to  Parliament,  Lord  John  Russell  having  found 
himself  forced  to  decline  the  task,  the  virtual  repeal  of  the 
Corn  Laws.  This  determined  the  course  of  fiscal  policy  for 
several  subsequent  years.  The  finances  of  the  country  were 
temporarily  disarranged  by  the  necessity  of  a  famine  loan  for 
Ireland  in  1847,  when  8,000,000/.  were  granted  to  the  relief 
of  its  starving  inhabitants,  and  the  year  of  revolution  (1848) 
dislocated  for  the  time  the  trade  with  the  Continent,  but  the 
progress  of  remission  of  duties  was  practically  uninterrupted. 
The  excise  on  bricks  followed  the  excise  on  glass ;  the 
abolition  of  the  Navigation  Laws,  which  Cromwell  had 
instituted  and  Adam  Smith  defended,  followed  that  of  the 
Corn  Laws ;  the  differential  duties  on  slave-grown  sugar 
disappeared  ;  and  the  income  tax  was  renewed  for  varying 
terms  as  the  instrument  which  made  all  these  reforms 
practicable.  It  had  never,  however,  been  accepted  as  a 
permanent  element  of  our  financial  system ;  and  in  1853, 
when  Mr.  Gladstone  was  for  the  first  time  at  the  Exchequer, 
as  Chancellor  in  Lord  Aberdeen’s  Ministry,  he  made  its 
definite  extinction  a  primary  object  of  a  far-reaching  and 
elaborate  Budget. 

The  situation  in  the  spring  of  1853  appeared  favourable  to 
large  financial  schemes.  The  peace  of  Europe  had  remained 
practically  unbroken  since  1815.  The  revenge  of  Waterloo, 
often  threatened,  had  never  arrived,  and  the  fear  of  it  had 
so  passed  away  that  not  even  the  installation  of  another 
Napoleon  in  power  in  France  provoked  anxiety.  We  our¬ 
selves  were  unmistakably  pacific.  Free-trade  had  been 
accepted  as  the  forerunner,  and  had  come  to  be  regarded 
as  the  hostage,  of  Peace.  If  Sir  Robert  Peel’s  first  motive 


518 


ECONOMIC  HISTORY. 


had  been  simply  the  restoration  of  the  national  credit,  he  had 
amply  succeeded,  for  the  Three  per  Cents,  were  above  par. 
With  peace  assured,  with  an  elastic  revenue,  and  with  the 
national  credit  firmly  established,  Mr.  Gladstone  was  easily 
allured  into  submitting  to  the  House  of  Commons  a  Budget 
providing  for  the  reduction  of  interest  on  the  National  Debt, 
a  removal  of  the  last  of  the  evil  excise  duties,  a  further  re¬ 
duction  and  simplification  of  the  tariff,  an  important  advance 
towards  the  establishment  of  an  identical  system  of  taxation 
throughout  the  United  Kingdom,  the  extension  of  duties  on 
devolution  by  death  to  settled  property,  real  and  personal,  and 
the  extinction  of  the  income  tax.  This  last  achievement, 
approached  by  steps,  was  to  be  consummated  in  1860,  when 
the  expiration  of  the  Long  Annuities  would  facilitate  the 
accomplishment  of  the  full  design.  The  scheme  was  large 
and  generous ;  and  if  it  be  objected  that  a  financial  system 
minus  the  income  tax  would  press  too  severely  on  the  con¬ 
suming  masses,  even  though  rectified  by  a  succession  duty 
producing  as  much  as  its  creator  anticipated,  this  is  a  criticism 
which  could  have  been  dealt  with  subsequently,  had  experience 
proved  its  force.  But  Mr.  Gladstone’s  plans  were  baulked 
almost  as  soon  as  they  were  formulated.  He  did  happily 
succeed  in  abolishing  the  excise  on  soap,  in  bringing  nearer 
equality  the  spirit  duties  in  the  three  kingdoms,  in  extending 
the  income  tax  to  Ireland,  and  in  instituting  the  succession 
duty;  but  the  interest  on  the  National  Debt  remained  un¬ 
reduced,  and  the  income  tax,  instead  of  being  continuously 
diminished  in  successive  years  until  it  vanished,  was  raised  to 
unheard-of  rates,  and,  surviving  1860,  has  endured  to  this 
day.  The  truth  is  that  what  appeared  to  be  the  crown  of  a 
period  of  peace  was  the  commencement  of  a  period  of  war. 
In  1858  began  the  movement  which  has  made  Europe  an 
armed  camp  for  a  generation.  When  not  actually  at  war  the 
nations  have  been  watching  and  preparing  for  war.  Military 
budgets  have  absorbed  the  energies  of  financiers,  and  the 
nations  which  have  remained  at  peace  have  been  drawn  along 
the  course  of  warlike  expenditure.  And  in  1853  the  United 
Kingdom  was  a  principal  in  the  first  European  struggle.  It 


ENGLISH  FINANCES . 


519 


was  Mr.  Gladstone’s  cruel  fate  to  be  called  upon  within  a  few 
months  to  demolish  his  own  constructions.  When  the  evil 
day  came  he  struggled  to  limit  the  duration  of  the  derange¬ 
ment  of  the  national  finances  at  the  cost  of  making  it  more 
severe.  He  laid  down  the  counsel  of  perfection  that  the  ex¬ 
penditure  upon  war  should  be  defrayed  as  incurred  out  of  the 
supplies  of  each  year.  It  is  indisputable  that  warlike  expendi¬ 
ture,  save  so  far  as  it  is  met  by  loans  from  outsiders,  is  with¬ 
drawn  from  the  existing  wealth  of  the  belligerent  nation ;  and 
if  each  taxpayer  could  be  got  to  contribute  his  share  the 
total  drain  would  be  no  greater  than  when  the  total  is  bor¬ 
rowed,  whilst  there  would  be  no  collective  debt  to  be  borne  by 
later  generations.  But  there  are  classes  of  taxpayers  who, 
though  possessing  the  necessary  wealth,  would  rather  borrow 
than  diminish  what  they  profitably  employ,  while  there  are 
many  more  who,  though  rightly  called  upon  to  contribute, 
have  no  assets  beyond  their  natural  energies,  which  they 
would  be  constrained  to  mortgage.  The  Chancellor  of  the 
Exchequer,  in  making  a  loan,  borrows  en  bloc  what  these 
taxpayers  should,  but  never  could,  borrow  for  themselves  ; 
and  his  financial  administration  is  justified  if  he  is  sustained 
in  the  policy  of  compelling  these  thriftless  units  to  repay 
within  a  reasonable  period  the  loan  so  contracted.  Mr. 
Gladstone  himself  left  the  Exchequer  before  the  necessity  of 
borrowing  was  completely  developed ;  but  he  supported  his 
successor,  Sir  George  Cornewall  Lewis,  in  frankly  following 
the  previous  practice,  and  he  himself  so  far  departed  from 
his  higher  doctrine  as  to  anticipate  the  taxes  of  future  years 
by  the  issue  of  Exchequer  bonds. 

The  episode  of  the  Crimean  war  was  the  first  serious 
check  of  the  financial  progress  which  dated  from  the  Budget 
of  Sir  Robert  Peel  in  1842.  The  National  Debt,  exclusive 
of  terminable  annuities,  had  declined  from  792,209,685L 
on  January  5, 1841,  to  769,082,549^.  on  April  5,  1854;  but 
it  rose  to  808,108,722L  by  April  5,  1857 ;  while  a  further 
addition  of  8,000,000^.  was  involved  in  an  increase  of  the 
terminable  annuities.  The  income  tax,  which  had  been 
maintained  at  the  uniform  rate  of  Id.  from  the  time  it 


520 


ECONOMIC  HISTORY. 


was  reimposed,  was  raised  during  the  war  to  Is.  4^.  in  the 
pound.  The  reduction  of  the  tea  duty,  which  Mr.  Gladstone 
had  arranged  in  1853  to  proceed  by  steps,  reaching  Is.  the 
pound  in  1856,  was  arrested  and  reversed,  so  that  in  1856 
it  was  Is.  9 d.  instead  of  Is.  The  coffee  duty,  the  sugar 
duties,  the  malt  duty,  were  all  raised  for  war  purposes,  and 
occasion  was  taken  to  raise  the  spirit  duties  to  a  level  from 
which  they  were  not  allowed  to  recede.  One  fact,  however, 
of  great  significance  must  be  noted  in  connection  with  the 
financial  administration  of  the  Crimean  war.  No  indirect 
tax  which  had  been  previously  abandoned  was  reimposed. 
Any  suggestion  to  revive  a  tax,  whether  of  excise  or  customs, 
was  mentioned  only  to  be  rejected.  There  had  been  an 
addition  made  to  the  total  of  national  indebtedness ;  the 
tax  on  incomes,  and  the  existing  taxes  on  consumption, 
had  been  sharply  increased,  but  there  had  been  no  recur¬ 
rence  to  any  discarded  engine  of  finance  —  least  of  all  to 
those  taxes  which,  while  offering  some  revenue  to  the 
Exchequer,  inflict  a  disproportionate  amount  of  injury  on 
taxpayers,  commerce,  and  industry.  So  it  might  be  said 
that  the  war  left  no  lasting  effects  on  our  financial  system. 
The  war  taxes  disappeared ;  the  question  of  debt  was  at  a 
later  date  seriously  grappled  with ;  all  became  as  before, 
save  that  the  military  expenditure  of  the  country  has  never 
recovered  its  old  proportions.  This  may  be  matter  of  con¬ 
gratulation  or  regret.  It  may  be  that  the  experience  of 
the  Crimea  revealed  a  dangerous  weakness  which  we  have 
wisely  abated  ;  or  it  may  be  that  the  new  circumstances  of 
Europe  have  compelled  preparations  which  were  not  wanted 
in  the  earlier  years  of  the  reign.  It  is  enough  here  to  recog¬ 
nize  the  fact  of  that  development  of  military  and  naval 
expenditure  which,  obtaining  a  great  start  in  the  years 
1854-5T,  has  never  since  been  arrested.  We  have  never 
returned  to  the  moderate  scale  of  army  and  navy  estimates 
which  prevailed  before  the  Crimean  war,  and  it  may  now 
be  admitted  that  it  was  inevitable  that  a  higher  level  should 
be  maintained.  These  estimates  had  been  rising  before  the 
peace  was  broken,  and  it  is  inconceivable  that  the  expe- 


ENGLISH  FINANCES. 


521 


riences  of  war  should  have  caused  what  would  have  been  a 
reversal  of  a  movement  already  in  progress.  But  it  may  be 
questioned  how  far  this  inevitable  increase  of  military  ex¬ 
penditure  should  have  been  recognized  and  confessed  at 
the  time ;  and  upon  the  answer  to  this  doubtful  question 
must  depend  our  judgment  of  the  conduct  of  the  most 
eminent  political  persons  of  the  day.  Notice  has  been  taken 
of  Mr.  Gladstone’s  argument  —  it  can  scarcely  be  called  more 
—  at  the  inception  of  the  Crimean  war  in  favor  of  meeting 
the  expenditure  of  war  by  increased  taxation,  and  it  has  been 
shown  how  this  excellent  counsel  was  abandoned.  Debt  was 
created,  but  simultaneously  with  it  taxes  were  imposed  which 
would,  within  a  definite  period,  suffice  to  extinguish  the 
additional  debt.  The  establishment  of  a  sinking  fund,  what¬ 
ever  its  form,  is  nothing  more  than  a  solemn  resolution  on 
the  part  of  the  representatives  of  the  nation  to  practise  some 
degree  of  self-denial  in  the  future,  which  resolution  may  be 
kept  or  broken  like  the  resolutions  of  separate  mortals.  At 
the  commencement  of  1857  the  war  had  ceased,  but  war 
taxes  were  still  legally  in  force,  and  the  income  tax  in  par- 
ticular  was  by  law  leviable  at  the  rate  of  Is.  4 d.  in  the  pound 
up  to  April  5,  1858.  It  had  been  provided  that  this  rate 
should  last  for  a  year  after  the  April  5  first  following  the 
ratification  of  peace,  and  the  Treaty  of  Paris  was  ratified  on 
April  27, 1856.  A  month’s  delay  in  the  settlement  of  peace 
had  fastened  the  higher  rate  on  the  nation  for  another  year ; 
but  this  was  scarcely  to  be  regretted  by  those  who  desired 
peace  to  make  good  the  expenses  of  war.  Some  popular 
impatience  was  natural ;  it  remained  to  be  seen  what  states¬ 
men  would  do.  In  the  debate  on  the  Address,  Mr.  Disraeli 
gave  notice  that  he  would  move  resolutions  against  the  con¬ 
tinuance  of  war  taxes  in  time  of  peace,  and  he  would  do  this 
4  as  an  impetus  to  salutary  economy,’  and  as  a  declaration 
against  England  becoming  4  a  great  military  nation.’  Mr. 
Gladstone,  also  in  Opposition,  held  a  similar  view  in  favor 
of  enforcing  economy  by  cutting  down  income,  and  hankered 
also  after  that  extinction  of  the  income  tax  in  1860  which  he 
had  planned  in  1853.  When  Sir  George  Lewis  opened  his 


522 


ECONOMIC  HISTORY. 


Budget  ten  days  later,  he  proposed  to  meet  his  critics  by  re¬ 
ducing  the  income  tax  at  once  from  Is.  4 d.  to  7 d.,  and  by 
making  small  immediate  reductions  in  the  tea  duty  and  the 
sugar  duties,  with  successive  reductions  in  the  following 
years ;  and  he  argued  that  the  engagements  that  had  been 
made  to  repay  the  war  debt  necessarily  required  a  rearrange¬ 
ment  of  Mr.  Gladstone’s  plans  of  1853.  But  his  proposals 
were  contested.  After  a  preliminary  debate  on  Mr.  Disraeli’s 
abstract  resolution,  in  which  he  received  Mr.  Gladstone’s 
support,  the  latter,  in  Committee  on  the  Budget  resolutions, 
moved  for  a  further  immediate  reduction  of  the  tea  and 
sugar  duties,  and  Mr.  Disraeli  for  a  reduction  of  the  income 
tax  to  5d.  in  the  pound.  These  motions  were  unsuccessful ; 
but  the  combined  action  of  these  statesmen  had  modified  Sir 
George  Lewis’s  Budget  in  advance,  and  produced  further 
fruit  in  the  following  year.  Mr.  Disraeli  was  then  Chancellor 
of  the  Exchequer  at  the  head  of  a  minority  in  the  House  of 
Commons,  and  the  outlook  was  unpromising.  The  estimates 
for  the  services,  to  which  the  new  Government  had  succeeded, 
were  not  diminished ;  and  if  the  arrangement  for  the  repay¬ 
ment  of  the  war  debt  was  to  be  maintained,  the  contemplated 
further  reduction  of  the  income  tax  must  be  abandoned,  and 
some  additional  revenue  sought  from  that  or  other  sources. 
In  this  dilemma  the  Government  decided  that  the  reduction 
of  the  income  tax  was  a  more  sacred  engagement  than  the 
repayment  of  war  debt,  and  Mr.  Gladstone,  with  the  ulti¬ 
mate  extinction  of  the  tax  in  1860  ever  in  his  mind,  sup¬ 
ported  the  Conservatives  against  a  vigorous  argument  of 
Sir  George  Lewis.  The  Budget  was  otherwise  noteworthy 
only  because  it  equalized  the  spirit  duties  in  Ireland  with 
those  in  Great  Britain,  and  thus  established  uniform  taxa¬ 
tion  in  the  kingdom. 

The  extinction  of  the  income  tax  in  1860  must  have  seemed 
a  dream  to  many  in  1858.  Mr.  Gladstone  himself,  returning 
to  the  charge  of  the  finances  in  1859,  had  to  propose  no  less 
addition  than  8 d.  to  the  income  tax  for  the  first  half  of  the 
financial  year,  making  it  136?.  in  the  pound  for  that  half,  to 
meet  the  very  large  addition  to  the  army  and  navy  estimates, 


ENGLISH  FINANCES. 


523 


due  to  the  anxieties  provided  by  the  state  of  Europe ;  and 
when  1860  came  the  income  tax  was  still  wanted,  aided 
though  the  Exchequer  was  by  the  falling  in  of  the  Long 
Annuities,  to  enable  that  last  great  revision  of  the  tariff  to  be 
effected  which  was  consequent  upon  the  commercial  treaty 
with  France.  Instead  of  the  long-contemplated  extinction, 
the  income  tax,  which  had  been  IZd.  in  the  pound  in  the  first 
half  and  3d.  in  the  second  half  of  1859,  was  raised  to  10 d.  for 
the  year  1860. 

With  or  without  the  treaty  there  was  ample  ground  for 
retaining  the  income  tax  in  1860.  Had  no  such  contract 
been  made  with  the  Emperor  of  the  French,  and  apart  from 
the  question  whether  the  income  tax  or  some  equivalent  direct 
impost  is  not  necessary  to  the  justice  of  our  financial  system, 
the  reasons  which  led  Sir  Robert  Peel  to  renew  the  tax  in 
1845,  if  not  those  which  led  him  to  reimpose  it  in  1842,  would 
have  justified  its  maintenance  in  1860.  To  get  rid  entirely 
of  customs  duties,  such  as  those  on  silks,  gloves,  flowers, 
watches,  and  all  manufactured  articles ;  to  set  free  the  impor¬ 
tation  of  such  articles  of  food  as  butter,  cheese,  eggs ;  to  reduce 
the  articles  in  the  tariff  from  419  to  48,  of  which  15  only  were 
significant  factors,  were  further  steps  in  the  progress  of 
liberation  of  commerce  and  of  the  removal  of  protective 
duties  that  were  most  advantageously  secured  by  the  retention 
of  the  income  tax.  If  Sir  Robert  Peel  was  right  in  1845,  the 
apology  of  a  treaty  was  not  wanted  in  1860.  Even  if  atten¬ 
tion  is  confined  to  the  reduction  of  the  wine  duties,  the  sum 
levied  by  the  income  tax  to  enable  this  to  be  made  is  advan¬ 
tageously  balanced.  The  fact  that  action,  which  might  have 
been  judiciously  taken  unilaterally,  was  made  the  considera¬ 
tion  of  a  bipartite  exchange,  did  without  doubt  double  the 
immediate  advantage,  and  the  temptation  to  throw  the  trans¬ 
action  into  the  form  of  a  treaty  was  enormous ;  but  it  must  be 
recognized  that  this  making  the  reduction  or  abolition  of 
customs  duties  a  matter  of  bargain  has  had  prejudicial  after¬ 
consequences  in  strengthening  the  delusion  that  protective 
duties  are  a  source  of  gain,  and  their  abolition  a  sacrifice. 
It  would  be  too  much  to  put  down  the  recrudescence  of  protec- 


524 


ECONOMIC  HISTORY. 


tive  ideas  on  the  Continent  to  this  cause,  but  they  have  almost 
insensibly  been  instilled  in  the  minds  of  men  by  the  use  of 
language  and  of  forms  of  bargain  and  exchange  having  no 
meaning  except  as  the  expression  of  Protectionist  principles. 
Happily  we  have  not  ceased  in  subsequent  practice  to  falsify 
the  attitude  of  negotiation  assumed  in  reference  to  the  French 
treaty ;  and,  indeed,  whilst  we  obtained  a  reduction  of  import 
duties  upon  our  goods  in  France  by  the  reduction  or  abolition 
of  duties  in  our  own  tariffs,  we  refused  to  restrict  these  modi¬ 
fications  to  goods  of  French  import,  and  extended  them  to 
the  produce  of  all  markets.  Of  the  fifteen  significant  articles 
retained  in  the  tariffs  of  1860,  six  have  since  been  entirely 
removed  (three  of  them,  sugar,  corn,1  and  timber,  being 
highly  productive  of  revenue)  without  any  attempt  to  make 
the  removal  of  any  one  of  them  a  means  of  producing  correla¬ 
tive  reductions  in  other  countries. 

The  financial  year  1860-61  ended  with  a  deficit,  chiefly 
though  the  effect  of  a  bad  harvest ;  and  the  year  1861-62  had 
the  same  unpleasant  experience,  too  large  reductions  of  taxa¬ 
tion  having  been  made  upon  too  sanguine  estimates  of  revenue ; 
but  with  the  next  year  began  a  period  of  financial  prosperity, 
which,  despite  a  severe  commercial  crisis  in  1866,  may  be 
•  said  to  have  continued  up  to  1874,  or  even  through  that  year. 
It  is  not  intended  to  dwell  upon  the  incidents  of  each  succes¬ 
sive  twelvemonth,  but  the  Budget  of  1866  demands  attention 
on  account  of  the  serious  effort  Mr.  Gladstone  then  made  to 
deal  with  the  National  Debt.  The  years  that  had  passed  since 
Sir  Robert  Peel  began  his  fiscal  reforms  had  left  this  perma¬ 
nent  burden  but  slightly  reduced.  The  period  before  the 
Crimean  war  had  closed  with  a  sensible  diminution  of  the 
total,  but  that  war  had  undone  all  that  had  been  effected,  and 
we  have  seen  how  the  resolution  to  pay  off  the  addition  con¬ 
tracted  under  its  pressure  had  melted  away.  It  seemed  as  if 
the  temptation  to  purchase  popularity  by  reducing  taxation 

1  Corn  had  remained,  under  Sir  Robert  Peel’s  Act,  liable  to  a  duty  of  Is. 
the  quarter,  which  he  regarded  as  nominal  and  retained  for  registration  pur¬ 
poses;  but  the  tax  produced  nearly  1,000,000/.  sterling  when  Mr.  Lowe  abolished 
it  in  1869,  and  it  undoubtedly  contributed  a  still  larger  bonus  for  the  production 
of  corn  in  the  United  Kingdom. 


ENGLISH  FINANCES. 


525 


must  always  prevail.  Thus  the  tea  duties  had  been  brought 
down  to  Is.  in  1863,  and  Mr.  Gladstone  then  spoke  of  this 
reduced  rate  as  one  that  would  be  maintained;  but  in  1865, 
on  the  eve  of  a  general  election,  the  rate  was  again  brought 
down  to  6d.  in  the  pound,  while  the  income  tax  was  reduced 
to  4 d.  But  in  the  year  1866  Mr.  Jevons  published  a  re¬ 
markable  book,  “The  Coal  Question,”  in  which  he  pointed 
out  that  the  progressive  increase  in  the  extraction  and  con¬ 
sumption  of  our  coal  could  not  be  maintained,  and  that  as 
our  superiority  in  respect  of  the  cheapness  and  accessibility 
of  this  spring  of  power  declined,  the  development  of  our 
national  prosperity  must  be  arrested ;  and,  unless  men  were 
wise  in  time,  dangerous  embarrassments  might  arise  between 
swollen  needs  and  attenuated  resources.  The  book  fell  into 
Mr.  Gladstone’s  hands.  His  receptive  and  impressionable 
intellect  was  strongly  affected  by  it,  and  in  his  Budget  of 
1866  he  proposed  to  the  House  of  Commons  to  make  use 
of  our  time  of  prosperity  to  pay  off  as  much  debt  as  possible, 
so  that  in  respect  of  it  the  national  energies  of  the  future 
might  not  be  unduly  handicapped.  Mr.  Jevons’s  position  has 
often  been  derided  by  critics  whose  language  proves  that  they 
have  not  understood  it,  and  many  suppose  that  his  warnings 
have  been  discredited  by  the/  falsification  of  prophecies  they 
attribute  to  him  which  he  never  uttered.  His  wisdom  re¬ 
ceived  a  sharp  practical  illustration  in  1873,  and,  if  the 
evidence  of  its  truth  has  not  since  been  so  acute,  it  has  been 
abiding.  Mr.  Gladstone  carried  Parliament  with  him  in  his 
main  proposal,  though  he  had  to  drop  part  of  his  machinery. 
His  plan,  stripped  of  all  disguises,  was  nothing  more  than 
this  —  to  apply  to  the  service  of  the  debt  a  sum  exceeding 
what  was  required  to  pay  the  annual  interest  on  its  capital, 
and  with  this  excess  and  its  accumulations  to  purchase  and 
extinguish  capital  up  to  a  fixed  date  —  in  this  case  1885. 
This  is  no  more  than  the  principle  of  every  sinking  fund,  but 
the  merit  of  Mr.  Gladstone’s  proposal  lay  in  the  thoroughness 
of  the  disguise  in  which  it  was  wrapped.  It  was  thought  at 
the  time  that  he  had  succeeded  in  clouding  it  from  himself ; 
and,  indeed,  the  gravity  of  the  respect  he  paid  to  his  own 


526 


ECONOMIC  HISTORY. 


machinery  supported  this  suspicion.1  A  few  years  later, 
Sir  Stafford  Northcote,  when  Chancellor  of  the  Exchequer, 
following  up  Mr.  Gladstone’s  desire  to  promote  a  reduction 
of  debt,  needlessly  varied  the  form  of  procedure ;  and  a 
strenuous  debate  arose,  remarkable  because  both  sides  shirked 
the  true  test  of  relative  merit,  viz.  which  plan  best  concealed 
from  the  ordinary  politician,  and  best  prevented  the  ordinary 
politician  from  explaining  to  the  ordinary  elector,  that  a  large 
and  increasing  sum  was  annually  applied  to  the  redemption 
of  debt  which  might  at  any  moment  be  shifted  to  the  reduc¬ 
tion  of  taxation.  Judged  by  this  criterion,  Mr.  Gladstone’s 
plan  was  incomparably  superior  —  its  excellence,  as  we  have 
said,  going  so  far  that  perhaps  it  shrouded  the  truth  from 
himself ;  and  it  was  not,  indeed,  until  many  years  later  that 
the  mask  was  removed  from  the  real  character  of  the  opera¬ 
tion.2  The  disguise  was  so  well  maintained  that  the  State 
was  for  two  or  three  years  paying  off  debts  through  one 
agency  and  contracting  it  anew  through  another  without  the 
nation  being  conscious  of  the  process. 

Mr.  Gladstone  obtained,  as  has  been  said,  the  assent  of 
Parliament  to  his  proposal,  to  which  Mr.  Disraeli  made  an 
addition  on  precisely  the  same  lines  in  1867  ;  but  the  period 
of  prosperity  of  which  we  have  spoken  enabled  these  efforts 

1  It  may  be  as  well  to  explain  the  machinery.  The  State  owes  a  capital 
of  (say)  750,000,000/.,  on  which,  through  Department  A,  it  pays  an  annual 
interest  of  22,500,000/.  But  the  State,  as  banker  of  the  Savings  Bank 
and  the  Post  Office,  holds  in  Department  B  (say)  50,000,000/.  stock,  part 
of  750,000,000/.,  on  which  Department  A  pays  Department  B  annually 
1,500,000/.  interest.  Department  A  says  to  Department  B,  “Instead  of 
paying  you  1,500,000/.  for  ever,  we  will  pay  you  2,500,000/.  for  a  sufficient 
number  of  years  to  insure  you  the  same  capital  at  the  end  of  it.”  Depart¬ 
ment  B  agrees,  and  during  this  period  of  years  Department  A  pays  annually 
in  respect  of  debt  23,500,000/.,  while  Department  B  invests  in  the  first  year 
1,000,000/.,  and  increasing  sums  in  each  successive  year,  so  that  at  the  end 
of  the  term  it  is  reinstated  in  the  possession  of  50,000,000/.  of  stock  purchased 
from  other  holders.  It  will  be  seen  that,  putting  aside  the  solemnity  of  formal 
interdepartmental  action,  made  more  solemn  because  expressed  in  an  Act  of 
Parliament,  the  State  has  simply  decided,  and  can  at  any  time  revoke,  vary,  or 
suspend  its  decision,  to  put  aside  a  sinking  fund,  beginning  at  1,000,000/.,  for  a 
defined  number  of  years  for  the  redemption  of  50,000,000/.  of  debt. 

2  See  post y  pp.  530-1. 


ENGLISH  FINANCES. 


527 


for  the  redaction  of  debt  to  be  made  concurrently  with  re¬ 
ductions  of  taxation. 

Mr.  Lowe  was  the  most  fortunate  of  finance  ministers, 
a  d  if  the  “leaps  and  bounds ”  of  industry  and  commerce 
c  lg  his  tenure  of  office  as  Chancellor  of  the  Exchequer 
ra  sed  some  foreboding  of  reaction  in  the  minds  of  forelookers, 
he  was  spared  the  necessity  of  meeting  the  ebb.  He  began 
his  financial  administration  with  a  coup  of  dazzling  success. 
He  reformed  and  simplified  the  assessed  taxes,  and  took 
occasion  of  this  change  to  call  for  their  collection  and  that 
of  the  income  tax  —  in  short,  the  direct  taxes  —  in  the  quarter 
•January  to  March,  and  by  this  acceleration  of  payment 
provided  himself  at  once  with  a  surplus.  The  following 
years  produced  more  legitimate  surpluses,  through  largely 
increased  consumption  of  dutiable  commodities,  especially 
of  beer  and  spirits ;  but  an  increase  of  expenditure  may 
always  outrun  an  increase  of  income,  and  the  army  esti¬ 
mates  of  1871,  being  much  swollen  through  the  influence  of 
the  Franco-German  war,  compelled  Mr.  Lowe  to  anticipate 
and  provide  for  a  deficiency.  What  followed  is  worth 
attention  as  illustrating  the  ordinary  limits  of  financial 
action.  Indirect  taxes  had  been  repealed  and  reduced  until 
they  had  become  very  few  in  number  though  affluent  in 
produce,  and  no  attempt  had  been  made  to  impose  a  new 
indirect  tax  or  (except  in  respect  of  spirits)  to  increase  an 
existing  tax  since  the  Crimean  war.  Successive  Chancellors 
had  been  tempted  to  meet  emergent  necessities  by  addi¬ 
tional  pence  in  the  income  tax,  so  that  any  fresh  adventure 
involved  a  call  on  a  limited  class  of  citizens.  Mr.  Lowe 
courageously  tried  to  depart  from  this  practice  by  the  intro¬ 
duction  of  a  new  tax  on  matches  ;  but  the  developed  opinion 
of  the  time  was  too  strong  for  him,  and  the  proposal  was 
abandoned,  along  with  others1  which  might  perhaps  have 
been  adopted  had  they  stood  alone,  and  the  ambitious 
Chancellor  had  to  fall  back  upon  the  simple  policy  of  his 
predecessors  —  twopence  more  in  the  income  tax.  This  was 

1  Proposals  to  make  the  income  tax  move  by  percentages  instead  of  by 
jumps  of  pence  in  the  pound,  and  to  alter  the  rates  of  legacy  and  succession 
duties. 


528 


ECONOMIC  HISTORY. 


the  only  check  in  Mr.  Lowe’s  good  fortune.  Surpluses 
allowed  reductions,  and  reductions  were  followed  by  sur¬ 
pluses,  and  when  Mr.  Gladstone  resigned  in  deference  to  the 
adverse  verdict  of  the  general  election  of  February  1874, 
the  surplus  to  be  dealt  with  by  the  incoming  Chancello  of 
the  Exchequer  was  no  less  than  6,000,000/. 

The  election  of  1874  was  perhaps  unique  in  the  atten.pt 
made  to  decide  it  upon  a  purely  financial  issue.  Mr.  Glad¬ 
stone  offered,  if  maintained  in  office,  to  abolish  the  income 
tax.  The  offer  was  coupled  with  some  plan  of  taxation  the 
nature  of  which  has  never  been  explained,  and  upon  which 
it  may  be  imagined  no  stress  whatever  was  laid  by  Mr. 
Gladstone’s  supporters  at  the  hustings.  Yet  upon  the 
character  of  this  plan  the  whole  question  of  the  acceptance 
or  rejection  of  Mr.  Gladstone’s  offer  ought  to  have  depended. 
An  abolition  of  the  income  tax,  unbalanced  by  some  strong 
proposals  of  taxation  of  property  and  some  means  of 
assessing  the  more  lucrative  trades  and  professions,  would 
have  left  our  financial  system  flagrantly  unjust.  It  is  not 
surprising  that  contemporary  continental  critics  should  have 
been  amazed  at  such  a  proposal  coming  from  a  democratic 
Minister.  Mr.  Disraeli  was  not  slow  to  appear  with  a  counter 
declaration  that  his  policy  no  less  favored  the  abolition 
of  the  income  tax.  Fortunately  the  electors  paid  extremely 
little  regard  to  these  rival  professions,  and,  when  the  elec¬ 
tion  was  over,  nothing  more  was  heard  of  the  abolition  of 
the  income  tax.  With  Mr.  Gladstone  it  had  been  in  former 
years  a  constant  aim.  He  had  planned  for  it  in  his  great 
Budget  of  1858.  He  had  kept  it  in  view  in  the  years  after  the 
Crimean  war.  But  1860,  the  promised  year,  came,  and  other 
objects  pushed  it  aside,  and  from  that  time  it  seemed  to  be 
dormant  in  Mr.  Gladstone’s  mind  until  1874.  The  response 
of  the  general  election  put  it  to  sleep  once  more,  and  it  has 
since  rested  in  peace. 

The  financial  record  of  Lord  Beaconsfield’s  Administra¬ 
tion  (1874-80)  is  not  brilliant.  After  the  distribution  of 
the  surplus  to  which  it  succeeded  (which  involved  the  dis¬ 
appearance  from  the  tariff  of  the  sugar  duties)  came  years 


ENGLISH  FINANCES. 


529 


of  increased  expenditure,  due,  among  other  causes,  to  war 
in  South  Africa  and  warlike  demonstrations  in  south-eastern 
Europe,  and  of  stagnant  revenue  owing  to  an  extraordinary- 
series  of  bad  harvests.  The  last  three  years  ended  in  large 
deficiencies.  The  attempts  made  to  supply  the  wants  of  the 
Exchequer  were  insufficient,  but  Sir  Stafford  Northcote  de¬ 
serves  credit  for  having  been  the  first  for  many  years  to  raise 
an  indirect  tax  other  than  that  on  spirits.  In  1877  lie 
increased  the  tobacco  duties,  and,  though  the  result  proved 
unequal  to  his  anticipation,  the  courage  of  the  attempt  must 
not  be  overlooked. 

The  leading  feature  of  the  financial  history  of  the  later 
years  of  the  reign  must  be  briefly  noticed.  Mr.  Gladstone 
began  his  second  Administration  by  transforming  the  malt 
duty  into  a  beer  duty.  The  suggestion  of  this  change  had 
often  been  made,  but  as  generally  dismissed  by  the  experts 
of  the  excise  as  impracticable.  Mr.  Gladstone,  however, 
succeeded  easily  in  accomplishing  the  impossible,  and,  by 
transferring  to  the  finished  product  the  tax  before  imposed 
at  an  earlier  stage  of  manufacture,  he  took  another  step  in 
his  life  work  of  liberating  industry  from  the  influence  of 
the  tax  gatherer.  Financially  the  change  has  been  most 
successful,  and  the  only  complaint  raised  has  been  because 
the  freedom  of  brewing  has  been  too  fully  established.  It 
appears  that  excellent  beer  can  be  made  from  maize  and 
rice  as  well  as  from  barley  or  sugar,  and  the  growers  of 
barley  are  displeased  at  the  discovery. 

All  the  good  counsels  of  Mr.  Gladstone’s  second  Adminis¬ 
tration  were,  however,  neutralized  by  its  excessive  expendi¬ 
ture,  mainly  on  the  army  and  navy,  and  almost  entirely 
due  to  complications  in  Egypt  and  on  the  Afghan  frontier. 
The  expenditure  on  the  forces  in  1885-86  did  not  fall  far 
short  of  40,000,000/.,  and  the  average  of  the  six  years 
1881-86  just  exceeded  30,000,000/.  These  sums  are  un¬ 
paralleled  in  the  expenditure  of  years  nominally  years  of 
peace.  It  is  no  part  of  this  sketch  to  trace  the  political 
spring  of  this  drain.  Whether  it  was  due  to  the  evil  policy 

of  Lord  Beaconsfield  or  originated  with  Mr.  Gladstone,  or 

34 


530 


ECONOMIC  HISTORY. 


whether,  if  started  by  the  former,  it  might  not  have  been 
stopped  by  the  latter,  or  whether,  again,  it  flowed  from 
external  causes  which  neither  could  prevent,  and  against 
which  both  were  bound  to  provide,  are  hypotheses  that  are 
arguable  and  have  been  argued.  All  that  is  to  be  noticed 
here  is  that  under  the  strain  of  this  expenditure  perished 
excellent  financial  designs,  just  financial  principles,  and 
ultimately  Mr.  Gladstone’s  Administration  itself. 

At  the  beginning  of  Mr.  Gladstone’s  Government,  the 
course  of  redemption  of  debt,  which  had  practically  been 
almost  destroyed  in  the  later  years  of  Lord  Beaconsfield, 
was  merrily  resumed.  Stock  was  absorbed  under  the 
operation  of  the  plan  of  terminable  annuities,  and  the 
price  of  the  3  per  cents,  was  steadily  maintained  at  and 
above  par.  Mr.  Childers,  in  1884,  gallantly  attempted  a 
further  conversion  of  the  3  per  cents,  into  2J  and  2J  per 
cents.,  and  he  obtained  the  sanction  of  Parliament  to  his 
plans,  to  which  at  first  a  sufficient  number  of  holders  of 
stock  seemed  prepared  to  assent ;  but  the  political  horizon 
became  clouded  even  while  the  details  of  the  scheme  were 
under  discussion.  The  suggestion  of  a  considerable  loan 
in  connection  with  the  Suez  Canal  deranged  the  money 
market,  and  the  design  proved  practically  abortive. 

A  more  serious  occurrence  befell  in  1885.  It  will  be 
remembered  that  the  terminable  annuities,  which  had  been 
created  as  a  means  of  reducing  debt,  came  to  an  end  in  that 
year,  and  those  who  had  at  heart  the  policy  of  diminishing 
the  national  burden  were  concerned  as  to  what  might  happen 
when  the  opportunity  would  be  openly  presented  of  diminish¬ 
ing  taxation  by  some  6,000,000Z.  at  a  stroke.  It  was  felt 
that  this  temptation  must  somehow  be  averted  ;  and,  accord¬ 
ingly,  when  in  1883  Mr.  Childers  anticipated  the  future  by 
proposing  a  further  conversion  of  about  70,000,000Z.  of  stock 
into  terminable  annuities,  to  take  the  place  of  those  soon 
about  to  expire,  thus  preventing  the  occasion  of  temptation, 
his  invitation  was  sanctioned  and  the  danger  seemed  past. 
But  what  happened  was,  perhaps,  worse  than  what  had  been 
guarded  against:  1885  came,  and  with  it  the  enormous,  the 


ENGLISH  FINANCES. 


531 


unparalleled  expenditure  to  which  reference  has  been  made ; 
and  a  general  election  was  nigh  at  hand,  disinclining  both 
Government  and  Opposition  from  any  suggestion  of  increased 
taxation.  In  these  circumstances  the  Chancellor  of  the 
Exchequer  proposed  to  balance,  or  approximately  balance, 
his  yearly  accounts  by  suspending  the  payment  of  terminable 
annuities  for  the  twelve  months  to  the  extent  of  4,600,000Z., 
leaving  a  still  uncovered  deficiency  to  be  met  in  a  similar 
manner  next  year.  The  proposal  was  accepted,  and  the 
superstition  of  the  sacredness  of  terminable  annuities  was 
gone  for  ever. 

Yet  another  sinister  circumstance  must  be  mentioned  in 
connection  with  the  year  1885-86.  Mr.  Childers  did  not 
content  himself  with  a  suspension  of  terminable  annuities. 
His  proposals  included  3 d.  more  on  the  income  tax,  an 
increase  in  the  beer  and  spirit  duties,  and  a  revision  of  death 
duties.  He  avowed  himself  anxious  not  to  throw  the  whole 
of  the  increase  upon  direct  taxation,  and  he  therefore 
suggested  additions  to  the  beer  and  spirit  duties.  Against 
this  last  resistance  was  raised.  Wholly  neglecting  the  effect 
of  the  additional  3 d.  on  the  income  tax,  a  vulgar  outcry 
was  made  that  the  Budget  taxed  the  luxuries  of  the  poor 
without  touching  those  of  the  rich,  and  upon  this  issue  the 
Conservative  Opposition,  reinforced  by  the  partisans  of  beer 
and  whiskey,  defeated  the  Government.  The  proposal  was 
withdrawn  by  the  new  Administration  which  was  formed, 
and  the  revision  of  the  death  duties  was  reduced  to  an 
extension  of  the  principle  of  the  succession  duty  to  a  small 
class  of  corporations,  so  that  the  taxing  part  of  the  Budget 
practically  became  an  unbalanced  addition  to  the  income 
tax.  Thus  Sir  Stafford  Northcote’s  action  in  1878  in  re¬ 
spect  of  the  tobacco  duties  remains  the  solitary  instance 
of  an  indirect  tax  raised,  and  none  has  been  imposed 
since  the  Crimean  war ;  and  usage  has  almost  consecrated 
the  principle  that  every  new  demand  for  expenditure  must 
be  met  by  a  levy  on  the  limited  class  of  payers  of  income  tax. 

A  review  of  the  financial  history  of  the  reign  shows  that 
there  has  been  accomplished  in  its  course : 


532 


ECONOMIC  HISTORY. 


(1)  A  removal  from  the  national  system  of  taxation  of 
all  imposts  which,  operating  as  protective  duties  in  favor 
of  the  home  or  colonial  producer,  imposed  taxes  on  the 
nation  greatly  in  excess  of  the  receipt  at  the  Exchequer. 

(2)  The  abolition  of  all  excise  duties  on  domestic  manu¬ 
factures  other  than  intoxicating  liquors* 

(3)  A  reduction  and  simplification  of  taxes  of  all  kinds, 
so  that  instead  of  a  multiplicity  of  imposts  of  which  many 
were  very  slightly  renumerative,  we  have  now  a  few  taxes 
cheap  in  collection  and  reaching  all  classes. 

(4)  The  establishment  of  identical  taxation  throughout  the 
United  Kingdom,  except  in  respect  of  minor  assessed  taxes. 

(5)  The  reimposition  and  maintenance  of  the  income 
tax,  which  must  now  be  defended  as  a  necessary  corrective, 
in  default  of  a  substitute,  of  what  would  otherwise  be  a  dis¬ 
proportionate  taxation  of  the  less  wealthy  classes ;  but  against 
this  there  is 

(6)  A  tendency  to  make  the  income  tax  the  sole  resource 
of  the  Chancellor  of  the  Exchequer  when  additional  demands 
are  made  upon  him ;  the  discovery  of  a  new  tax  a^id  the  re¬ 
imposition  of  a  discontinued  tax  appearing  to  be  practically 
impossible. 

(7)  A  deliberate  policy  to  reduce  the  permanent  burden 
of  the  National  Debt,  steadily  maintained  through  the 
machinery  of  terminable  annuities  from  1866  to  1885,  and 
we  may  hope  capable  of  being  maintained  in  future  though 
now  impaired  in  authority. 

(8)  A  system  always  declared  to  be  temporary,  but  as 
constantly  increasing  in  dimensions,  and  now  of  long  stand¬ 
ing,  of  alleviating  the  difficulties  of  local  taxation  by  making 
grants  from  the  Exchequer  in  relief  of  the  cost  of  local  ad¬ 
ministration  ;  and  lastly, 

(9)  The  years  subsequent  to  the  Crimean  war  have  been 
characterized  by  an  almost  continuous  growth  in  naval  and 
military  expenditure,  due  to  an  apprehension,  well  or  ill 
founded,  of  danger  from  the  military  ambition  of  now  one 
and  then  another  continental  Power  during  that  period. 


L’ESSOR  INDUSTRIE L  DE  L’ALLEMAGNE.  533 


XIX. 


L’ESSOR  INDUSTRIEL  DE  L’ALLEMAGNE. 

From  Blondel’s  L’Essor  Industriel  et  Commercial  du 
Peuple  Allemand,1  pp.  1-35. 

LORSQU’ON  embrasse  d’un  regard  d’ensemble  revolution 
de  l’Europe  contemporaine,  on  arrive  bien  vite  a  cette 
conviction  que  nulle  part  cette  evolution  n’a  6t6  plus  impor- 
tante  qu’en  Allemagne.  De  tous  les  Etats  europdens,  le  nouvel 
Empire  crde  a  la  suite  des  victoires  de  1870  est  celui  que 
nous  avons  aujourd’hui  le  plus  d’intdret  a  £tudier  et  le  plus 
de  profit  a  connaitre. 

La  race  germanique  tient  sans  doute  depuis  longtemps  une 
place  considerable  dans  l’histoire  du  monde.  Ce  sont  an  ve 
siecle  des  invasions  germaniques  qui  coincidant  avec  l’expan- 
sion  du  christianisme,  ont  detruit  la  socidte  paienne  et  sub- 
stitud  au  monde  antique  une  organisation  nouvelle.  C’est 
encore  la  pensde  germanique  qui,  mille  ans  plus  tard,  par  la 
R^forme  coincidant  avec  la  Renaissance,  a  contribu^  &  trans¬ 
former  la  societe  du  moyen  age  et  &  faire  germer  des  principes 
nouveaux.  Le  role  de  P  Allemagne  n’est  pas  moins  conside¬ 
rable  maintenant.  C’est  en  vain  que  journaux,  brochures, 
livres  a  succds,  cherchent  quelquefois  a  nous  faire  illusion,  a 
nous  amuser  ou  a  nous  rassurer.  L’influence  germanique  se 
fait  partout  sentir.  L’ Allemagne  joue  un  role  plus  important 
que  jamais  dans  la  vie  gdnerale  de  Phumanitd. 

II  ne  sera  question  ici  que  de  son  essor  industriel  et  com¬ 
mercial,  qu’il  nous  importe  beaucoup  de  connaitre  et  de 
mesurer.  Cet  essor  nous  l’dtudierons,  quels  que  puissent  etre 


1  Paris:  L.  Larose,  3  dd.  1900. 


584 


ECONOMIC  HISTORY. 


nos  griefs  a  regard  de  PAllemagne,  avec  toute  Pimpartialit^ 
possible.  C’est  une  erreur  de  s’attarder  aujourd’hui  a  dire  du 
mal  des  Allemands  :  ils  ont,  comrae  tous  les  peuples,  leurs 
quality  et  leurs  ddfauts.  II  importe  beaucoup  plus  de  se 
rendre  un  compte  exact  de  la  somme  d’efforts  fait  par  eux 
depuis  quelques  ann^es  dans  toutes  les  directions  que  peut 
suivre  V esprit  liumain. 

“  II  y  a  en  France,”  4crivait  dernierement  le  philosophe 
russe  Novicow, “  une  phrase  qui  court  les  rues  et  qui  m’indigne 
toujours:  ‘La  guerre  est  l’industrie  nationale  de  la  Prusse!’ 
Ce  n’est  pas  que  je  tienne  la  Prusse  pour  pacifique  et  pour  un 
champion  du  droit.  Non,  mais  la  guerre  est  l’^ducation 
nationale  de  tous  les  peuples ;  Russes  et  Frangais  en  ont  us4 
et  abus4  autant,  sinon  plus,  que  les  Prussiens.”  A  mon  tour, 
je  n’hdsite  pas  a  dire  que  je  suis  beaucoup  plus  frapp4  des 
progrbs  4conomiques  de  l’Allemagne  que  de  ses  succks  mi- 
litaires.  Les  Allemands  semblent  penser  aujourd’hui  que  la 
premibre  p^riode  de  leur  Education,  la  p^riode  guerriere,  est 
achev^e,  et  qu’il  faut  completer  cette  oeuvre  imparfaite  par 
le  d4veloppement  de  toutes  les  ressources  4conomiques  du 
pays. 

Le  soir  de  la  reddition  de  Metz,  le  prince  Fr4d4ric-Charles 
aurait,  dit-on,  adress^  aux  officiers  qui  Pentouraient  ces 
paroles  :  “  Nous  venons,  Messieurs,  de  vaincre  sur  le  terrain 
militaire ;  il  s’agit  maintenant  de  combattre  et  de  vaincre  sur 
le  terrain  industriel.” 

Que  ces  paroles  aient  4td  ou  non  prononc6es  (on  m’a  assur4 
qu’elles  6taient  apocryphes),  on  peut  dire  qu’elles  ont 
vraiment  un  programme.  Les  Allemands  ne  se  sont  pas  en- 
dormis  sur  leurs  lauriers ;  ils  ont  compris  que  la  prosp£rit4 
commerciale  4tait  le  soutien  n^cessaire  de  leur  gloire,  la  fin 
logique  de  leurs  efforts.  Youlant  devenir  victorieux  par 
l’outil  comme  ils  l’avaient  6t6  par  le  canon,  ils  ont  inaugur^ 
depuis  1870  une  bre  industrielle  nouvelle.  Surexcit^s  par  le 
succfes,  mais  non  pas  enivres  par  lui,  ils  ont  besogn£  comme 
l’eut  fait  un  peuple  vaincu  qui  aurait  voulu  se  relever,  et  n’ont 
recul4  devant  aucun  labour  pour  conqu4rir  de  haute  lutte  la 
premibre  place. 


DESS  OR  INDUSTRIE L  DE  L'ALLEMAGNE.  535 


II  faut  aujourd’hui  s’incliner  devant  les  faits :  les  victoires 
gagnEes  sur  les  champs  de  bataille  ont  leur  pendant  sur  le 
terrain  economique.  MEthodiquement,  FAllemagne  est  en 
•train  de  dEloger  les  autres  peuples  des  places  ou  ceux-ci 
s’Etaient  sEculairement  Etablis  et  de  conquErir  pacifiquement 
par  son  industrie  et  son  commerce  les  marches  du  monde.  .  . 

L’essor  Economique  de  FAllemagne  fut  longtemps  ralenti 
par  le  morcellement  politique  du  pays.  En  1872,  au  lende- 
main  de  nos  dEfaites,nous  Etions  encore  dansune  situation  meil- 
leure  que  le  nouvel  Empire.  Le  mouvement  gEnEral  de  notre 
commerce  avec  l’Etranger  et  les  colonies  Etait  alors  de  plus  de 
7  milliards  et  demi  (3  milliards  949  millions  aux  importa¬ 
tion  ;  3  milliard  676  millions  aux  exportations).  Pour  FAlle¬ 
magne,  le  premier  rapport  annuel  de  l’office  impErial  de 
statistique  (qui  fonctionne  depuis  cette  Epoque)  n’indique 
qu’un  total  de  5  milliards  960  millions  de  marcs,  ce  qui  fait 
moins  de  7  milliards  et  demi  de  francs. 

Combien  depuis  cette  Epoque  les  choses  ont  changE ! 

Le  commerce  spEcial  de  l’Empire  allemand  a  augmentE  des 
3/5  en  valeur  depuis  1872,  et  de  1/3  depuis  1881,  malgrE  la 
diminution  notable  du  prix  de  beaucoup  de  marchandises. 
L’Allemagne  a  maintenant  sur  nous  une  avance  de  plus  de 
2  milliards  et  demi. 

Ces  chiffres  mEritent  d’autant  plus  de  fixer  Fattention  que, 
d’aprEs  les  travaux  du  statisticien  Juraschek,  le  commerce 
gEnEral  du  monde  n’a  augmentE  que  de  24  depuis  1873, 
que  de  8  %  depuis  1883.  Le  commerce  de  l’Empire  alle¬ 
mand  se  dEveloppe  done  actuellement  beaucoup  plus  vite  que 
le  commerce  gEnEral  du  monde.  Aussi  FAllemagne,  qui 
n’occupait  quo  le  quatriEme  rang  en  1871,  est  dEj&  passEe  au 
second. 

Les  rEsultats  dEja  connus  pour  1’annEe  1899  sont  excellents 
et  attestent  une  augmentation  notable  du  chiffre  des  affaires 
par  rapport  h  1898  et  1897.1 

1  Deutsche  Industrie  Zeitung,  28  septembre,  1899,  p.  585.  Rapport  de  M.  Boutiron, 
Moniteur  officiel  du  commerce ,  14  septembre,  1899,  p.  353.  Cf.  on  more  recent 
years  Blond  el’s  La  situation  Economique  de  Vempire  allemand  au  debut  du  xxe 
siecle  in  Revue  d' Economique  politique,  mai,  1901,  pp.  537-544. 


536 


ECONOMIC  HISTORY. 


Yoici  le  tableau  de  ses  progres  depuis  1889. 


Annies. 

Commerce  G^n^ral. 

Commerce  Special. 

_ A _ 

r 

Importations. 

Exportations. 

«< - 

Importations. 

Exportations. 

Tonnes  de 

Tonnes  de 

Millions 

Millions 

1,000  kilog. 

1,000  kilog. 

Tonnes. 

de  marcs. 

Tonnes. 

de  marcs. 

1889  .  . 

29.995.642 

21.446.922 

26.611.896 

4.087  0 

18.292.587 

3.256  4 

1890  .  . 

31.732.876 

22.444.247 

28.142.803 

4.272  9 

19.365.081 

3.409  5 

1891  .  . 

32.687.214 

23.338.635 

29.012.719 

4.403  4 

20.139.376 

3.339  7 

1892  .  . 

32.156.491 

22.677.490 

29.509.912 

4.227  0 

19.891.615 

3.150  1 

1893  .  . 

33.198.655 

24.262.851 

29.815.557 

4.134  1 

21.361.544 

3.244  6 

1894  .  . 

35.167.327 

25918.436 

32.022.502 

4.285  5 

22.883.715 

3.055  1 

1895  .  . 

35.682.929 

26.953.924 

32.536.976 

4.246  1 

23.829.658 

3.422  1 

1896  .  . 

39.934.449 

29.223.577 

36.410.257 

4.557  9 

25.719.876 

3.753  8 

1897  .  . 

45.890.670 

32.206.040 

40.162.316 

4.832  9 

28.019.948 

3.816  2 

1898  .  . 

45.900.000 

33.400  000 

42.718.075 

5.440  1 

30.086.228 

4.010  7 

La  progression  des  exportations  allemandes  est  d’autant 
plus  significative  que  telle  n’est  pas  la  note  dominante  dans 
les  autres  Etats  europ^ens.  a  Les  vieux  peuples  de  l’Occident,” 
^crivait  nagukre  M.  Ren£  Lavollde,  “  d^clinent  h  ce  point  de 
vue  (il  s’agit  du  mouvement  des  exportations  de  1886  a  1896) 
h  peu  pres  tous  ou  ne  progressent  que  tr&s  lentement.  Nous 
subissons  cette  loi ;  la  Belgique,  la  Suisse,  Tltalie  ^galement, 
l’Angleterre  elle-meme  est  sdrieusement  menacde.  L’Alle- 
magne  avec  les  Pays-Bas,  fait  seule  exception.  Mais  si  en 
Europe  le  chiffre  des  exportations  est  en  diminution  ou  mar¬ 
que  k  peine  un  progrks,  la  marche  en  avant  des  peuples  nou- 
veaux  se  poursuit  et  s’accentue.  Dans  cette  mOme  p^riode 
de  10  ans,  l’exportation  des  Etats-Unis  a  pass6  de  3.330  k 
3.96T  millions  de  francs,  celle  du  Canada  de  389  a  515  mil¬ 
lions,  celle  de  la  R^publique  argentine  de  350  a  510,  celle  de 
la  Chine  de  423  a  705,  celle  du  Jabon  de  260  k  728,  celle  de 
l’lnde  de  2.125  h  3.930,  enfin  celle  de  l’figypte  de  275  k 
424.  L’avenir  est  k  ces  peuples  jeunes  que  la  vieille  Europe 
a  imprudemment  (!)  r£veill£s  de  leur  sommeil  s^culaire  et  qui 
sous  le  ciel  le  plus  clement,  avec  des  richesses  naturelles  pour 
ainsi  dire  illimit^es,  avec  un  sol  fertile,  avec  les  inventions, 
les  machines  et  les  capitaux  du  vieux  monde,  semblent 
appclds  a  devenirles  pacifiques  dominateurs  et  pour  ainsi  dire 
les  rois  commerciaux  du  sikcle  prochain.”  Le  d4veloppe- 


L’ESSOR  IND US TRIEL  BE  L’ALLEMA  GNE.  537 

ment  continu  des  exportations  allemandes  en  presence  d’une 
telle  Evolution  n’en  est  que  plus  remarquable. 

Les  progres  de  notre  commerce  exterieur  sont  loin  d’etre 
aussi  brillants.  Nos  importations  ont  passe,  il  est  vrai,  en 
1898  h  4  milliards  376  millions  195  mille  francs,  mais  nos 
exportations  sont  descendues  a  3  milliards  603  millions  167 
mille  francs. 

Si  nos  importations  ont  augmente  c’est  surtout  parce  que 
nous  avons,  dans  ces  dernikres  anndes,  d^pensd  davantage 
pour  nous  procurer  des  objets  d’alimentation,1  et  parce  que 
nous  avons  fait  venir  un  plus  grand  nombre  d’objets  manu¬ 
factures  de  l’etranger,  par  exemple  un  grand  nombre  de 
machines  anglaises,  americaines  et  allemandes.  Ce  n’est  pas 
parce  que  nos  recettes  se  sont  eiev4es.  Nous  trouvons  en 
effet  aux  importations  a  c6t4  d’une  augmentation  pour  les 
objets  fabriqu^s,  une  diminution  en  ce  qui  concerne  les 
matures  n^cessaires  k  l’industrie,  ce  qui  indique  un  ralentisse- 
ment  dans  la  vie  industrielle  de  la  nation. 

Mais  c’est  aux  exportations  surtout  que  les  chiffres  sont 
peu  favorables.  Depuis  1891  nous  n’avons  fait  aucun  pro- 
gr£s,  et  si  m§me  nous  remontons  d’une  vingtaine  d’anndes  en 
arri£re  nous  constatons  que  nos  exportations  sont  en  diminu¬ 
tion  par  rapport  aux  chiffres  de  cette  epoque-lk  de  pr£s  de  200 
millions. 

Les  chiffres  deja  connus  pour  l’annde  1899  sont  heureuse- 
ment  plus  satisfaisants,  ils  attestent  une  augmentation  notable 
de  nos  exportations.  Puisse-t-elle  se  maintenir !  Puisse 
l’ann^e  1900  surtout  ne  pas  nous  ^server  trop  de  surprises ! 
La  periodicity  des  crises  commerciales  nous  permet  de  comp¬ 
ter  en  ce  moment  sur  une  reprise  des  affaires.2  Mais  en 
definitive  il  faut  reconnaitre  que  nos  produits  ne  sont  plus 
recherches  comme  ils  l’etaient  jadis  sur  les  grands  marches 
du  monde.  Beaucoup  de  ceux-ci  se  sont  fermes  peu  a  peu 
k  nos  marchandises. 

A  cet  egard  le  contraste  avec  l’Allemagne  est  grand.  C’est 
en  1877  que  le  jeune  Empire  nous  a  depasses.  Son  mouve- 

1  Ainsi  nos  achats  aux  £tats*Unis  ont  pass6  en  1897  de  57.955.000  dollars  h 
95.452.000. 

2  V.  C.  Juglar,  Les  crises  commerciales  2e  ddit.,  1892. 


538 


ECONOMIC  HISTORY. 


ment  d’affaires  surpasse  maintenant  le  nOtre  de  4  milliards 
de  francs.  Nous  ne  venons  plus  maintenant  qu’au  quatrieme 
rang,  apres  l’Angleterre,  l’Allemagne  et  les  Etats-Unis.  .  . 

Si,  a  cotE  du  mouvement  gEnEral  du  commerce,  nous 
plagons  les  chiffres  qui  concernent  le  commerce  maritime, 
nous  sommes  en  presence  de  constatations  encore  plus 
caractEristiques. 

L’Allemagne  n’avait  encore  enl870  qu’une  modeste  marine 
marchande,  comptant  seulement  179  vapeurs,  et  ayant  une 
capacitE  totale  de  642.000  tonnes.  Elle  a  maintenant  (chiffres 
de  1898)  3.693  navires  (dont  1171  a  vapeur),  jaugeant 
1.555.371  tonnes  (dont  969.800  pour  les  vapeurs),1  et  months 
par  42.488  hommes  d’Equipage.  » 

D’apres  le  mEmoire  qu’adressaient  naguere  au  Reichstag  les 
armateurs  du  port  de  Hambourg  pour  lui  demander  de  voter 
en  faveur  de  l’augmentation  des  forces  navales,  dans  la  pEriode 
1873  a  1895,  c’est-a-dire  dans  une  pEriode  de  23  annEes,  la 
progression  de  la  marine  marchande  a  EtE  pour  l’Allemagne 
de  100  a  265,  tandis  que  pour  la  France  elle  n’a  EtE  que  de 
100  a  132. 

De  tous  les  chiffres  qu’on  peut  citer,  les  plus  attristants, 
ceux  qui  en  expliquent  d’ailleurs  beaucoup  d’autres,  ce  sont 
ceux  qui  concernent  la  population.  Yers  1840  la  France  avait 
plus  d’habitants  que  l’ensemble  des  pays  formant  l’Empire 
actuel.  En  dEpit  d’une  forte  Emigration  la  population  de 
l’Empire  allemand  a,  de  1872  k  1897,  augments  de  12.300.000 
individus,  c’est-^-dire  de  prEs  de  30  .  Elle  est  aujourd’hui 
de  pres  de  55  millions. 

Tandis  qu’en  France  l’augmentation  annuelle  de  la  popula¬ 
tion  n’a  Et E  en  moyenne  pendant  la  derniEre  pEriode  dEcen- 
nale  que  de  29.000  individus,  et  parait  toujours  s’abaisser, 
elle  est  aujourd’hui  de  plus  de  700.000  chez  nos  voisins.  En 
1896  il  y  a  eu  816,000  naissances  de  plus  que  de  dEcEs ! 
1.000  mariages  donnent  en  Allemagne  270  enfants,  tandis 
qu’ils  n’en  donnent  en  France  que  163.  Le  nombre  des  mar¬ 
iages  est  en  outre  plus  faible  en  France  qu’en  Allemagne.  Sur 
100  personnes  en  situation  de  se  marier,  la  statistique  ne  relEve 

1  Et  il  faut  tenir  compte  de  ce  fait  que  la  tonne  de  registre  pour  les  navires 
&  vapeur  est  triple  de  la  tonne  de  registre  pour  les  voiliers. 


L'ESSOR  INDUSTRIE L  DE  L'ALLEMA  ONE.  539 


pour  la  France  que  45  manages  contre  53  en  Allemagne.  II 
n’est  que  trop  facile  de  pressentir  dans  ces  conditions  ce  que 
sera  la  situation  respective  des  deux  pays  dans  vingt-cinq  ou 
trente  ans.1 

Les  anndes  1896, 1897  et  1898  ont  4t4  au  point  de  vue  du 
mouvement  de  la  population  particuli^rement  satisfaisantes. 
II  y  a  eu  augmentation  du  nombre  des  manages  et  diminution 
du  nombre  des  d4cks.  Immigration  a  fortement  baiss4 :  elle 
n’a  6td  que  de  32.114  personnes  en  1896,  que  de  24.220  en  1897 
et  que  de  20.966  en  1898.  Cette  diminution  est  un  indice  de 
prospdritd. 

Et  l’Allemagne,  a  en  juger  par  son  magnifique  essor  4co- 
nomique,  est  loin  d’etre  “  saturde.”  Quand  on  la  compare  a 
la  Belgique,  qui  a  213  habitants  par  kilometre  carr£,  il  est 
permis  de  penser  que  les  progres  qu’y  fait  aujourd’hui  l’indus- 
trie  lui  permettront  dans  quelques  ann4es  de  nourrir  100  mil¬ 
lions  d’habitants  plus  aisdment  qu’elle  ne  r^ussit  aujourd’hui 
a  en  nourrir  54.  L’Allemagne,  au  commencement  de  ce 
sikcle,  avec  une  population  de  22  millions  d’habitants,  n’4tait- 
elle  pas  in  liniment  plus  pauvre  qu’elle  ne  l’est  maintenant  avec 
une  population  plus  que  double  ?  Nous  pleurons  avec  raison 
la  perte  de  1’ Alsace-Lorraine  qui  nous  a  enlev4  un  million  et 
demi  d’habitants.  Mais  nous  oublions  volontiers  que  depuis 
1870  notre  faible  natality  nous  a  priv4  d’une  population  huit 
a  neuf  fois  sup^rieure  ?  Perte  d’autant  plus  deplorable  que  ce 


1  Cf.  Fitger,  Die  Zunahme  der  Brdlkerung  Deutschlands  und  die  Handel svertrag- 
spolitik,  1897.  Progres  de  la  population  de  l’Allemagne,  depuis  20  ans  : 


1875 

1880 

1885 

1890 

1895 

1896 


42.728.000 

45.234.000 

46.850.000 

49.428.000 

52.000.000 

53.324.000 


L’Allemagne  a  maintenant  16  millions  d’habitants  de  plus  que  la  France.  La 
seule  cause  de  cette  croissance  rapide  est  le  grand  nombre  des  naissances,  car 
l’emigration  depasse  toujours  l’immigration.  C’est  en  partie  parce  que  nous 
avons  peu  d’enfants  qu’on  dit  que  la  France  est  un  pays  riche.  L’abondance 
d’argent  est  en  effet  accrue  par  le  fait  d’une  economie  d’enfauts  qui  diminue  in- 
contestablement  notre  puissance  de  travail.  Le  pere  de  famille  qui  a  5  ou  6  en- 
fants  quelle  que  soit  sa  fortune,  travaille  certainement  plus  et  par  suite  contribue 
plus  au  developpement  de  la  richesse  publique  que  celui  qui  n’en  a  que  2  ou  3. 


540 


ECONOMIC  HISTORY. 


supplement  de  naissances  qui  nous  fait  ddfaut  aurait  formd 
prdcis^ment  la  partie  de  la  population  qui,  stimuli  par  le 
besoin,  etit  le  mieux  su  jouer  des  coudes  dans  la  mel£e  £cono- 
mique,  celle  qui  se  fut  r^pandue  dans  le  monde  pour  cliercher 
des  debouches,  et  qui  eut  contribue  le  plus  au  rayonnement  et 
a  la  grandeur  du  pays.  On  l’a  dit  avec  raison :  la  France 
manque  de  cadets.1  II  y  a  un  rapport  etroit  entre  les  faits 
qui  touchent  a  la  population  et  ceux  qui  concernent  l’in- 
dustrie  et  le  commerce.  Le  developpement  du  commerce 
entraine  celui  de  l’industrie  et  comme  consequence  l’accroisse- 
ment  de  la  population  a  laquelle  l’industrie  fournit  du  travail. 

Ce  sont  surtout  les  villes  et  les  centres  industriels  qui 
grandissent  en  Allemagne  rapidement.  II  n’y  avait  encore, 
vers  1840,  que  deux  villes  (Berlin  et  Hambourg)  ayant  plus 
de  100.000  habitants.  II  y  en  a  une  trentaine  aujourd’hui ! 
La  croissance  des  villes  en  Allemagne  est  un  des  faits  qui 
caracterisent  les  vingt-cinq  dernieres  annees,  et  c’est  un  indice 
sur  du  developpement  4conomique  du  pays. 

En  vingt  ans,  deux  des  28  grandes  villes  allemandes  (Mann¬ 
heim  et  Diisseldorf)  out  augment^  de  plus  de  100  %,  huit  de 
80  h  100  %,  quatorze  de  58  &  80  %,  quatre  de  28  a  50  %. 
La  ville  frangaise  qui  enregistre  l’augmentation  maximum 
(Roubaix)  ne  viendrait  en  Allemagne  qu’au  vingt-cinquikme 
rang.  Pour  trouver  l’exemple  d’une  pouss^e  aussi  rapide  il 
faut  aller  jusqu’aux  Etats-Unis,  et  encore  doit-on  chercher 
dans  les  parties  neuves  de  la  grande  R^publique,  pour  y  con- 
stater  le  croit  monstrueux  de  Chicago  (281  %)  ou  l’dclosion 
de  villes  de  150.000  ames  comme  Kansas  ou  Omaha.  Sur 
les  cOtes  de  l’Atlantique  ou  dans  la  valine  inf^rieure  du 
Mississippi,  les  villes  ne  progressent  pas  plus  vite  qu’en 
Allemagne.2 

1  Frary,  Le  pfril  national,  p.  265. 

2  Accroissement  compare  de  Berlin  et  de  New-York. 

Berlin.  New-York. 

Noyau  seul . 76  O/O  61  O/O 

Banlieue  comprise .  90  0/0  76  0/0 

V.  sur  ces  divers  points  le  bel  ouvrage  de  M.  Paul  Meuriot,  Des  Agglomerations 
urbaines,  Paris  (Belin),  1897,  p.  168  et  suiv.,  et  l’article  de  Franz  Oppenheimer 
dans  la  Neue  Deutsche  Rundschau,  juin  1899. 


L'ESSOR  INDUSTRIE L  DE  V ALLEM A GNE.  541 


L’augmentation  de  la  population  a  particulierement 
sensible  depuis  quelques  ann4es  dans  le  royaume  de  Prusse. 
L’accroissement  normal,  c’est-a-dire  l’exc4dent  des  naissances 
sur  les  ddces,  y  a  dtd,  en  1894,  de  463.828  personnes ;  en  1895 
de  478.358 ;  en  1896  de  518.650  ;  en  1897  de  510.000. 

L’accroissement  de  la  population  en  Allemagne  profite  sur- 
tout  aux  classes  industrielles,  les  classes  agricoles  restant  a 
peu  prds  stationnaires. 

II  suffit  de  rapprocher  l’un  de  l’autre  les  recensements  de 
1882  et  de  1895  pour  avoir  une  id£e  de  l’importance  crois- 
sante  que  prennent  les  premieres : 


1895. 

1882. 

A. 

Agriculture.  —  Forets.  —  Peche  .... 

35,74 

42,51  % 

B. 

Exploitation  des  mines. —  Industrie  .  .  . 

39,12 

33,51 

C. 

Commerce . 

11,52 

10,02 

D. 

Services  domestiques . 

1,71 

2,07 

C. 

Armee.  —  Fonctions  publiques.  —  Carrieres 

liberales . 

5,48 

4,92 

D. 

Sans  profession  . 

6,43 

4,67  1 

L’augmentation  est  encore  plus  sensible  en  Prusse  que  dans 
le  reste  de  l’Empire.  L’un  des  derniers  rapports  de  notre 
ambassadeur  a  Berlin,  le  marquis  de  Noailles,  nous  donne  a 
cet  4gard  des  renseignements  significatifs. 

Le  nombre  des  entreprises  industrielles  s’&evait  en  Prusse 
en  1882  k  1.955.253  ;  il  atteignait  en  1895  1.990.244.  Ce 
n’est  sans  doute  qu’une  augmentation  de  1,79  %;  mais 
l’accroissement  du  nombre  des  ouvriers  (qui  est  pass£  de 
4.257.944  a  5.861.589)  est  de  37,66  %. 

Cet  4cart  s’explique  par  la  depression  qu’a  subie  la  petite 
industrie  au  profit  de  la  grande.  Le  nombre  des  industries 
exercdes  par  des  ouvriers  isoMs,  sans  collaborates  et  sans 
moteur,  qui  etait  en  1882  de  1.288.380,  est  en  effet  descendu 
a  1.171.727,  tandis  que  celui  des  industries  exerc^es  par  des 
collectivity  ou  avec  l’aide  de  moteurs  est  montd  de  666.873  a 
818.517. 

1  Vierteljahreshefle  zur  Statistik  des  Deutschen  Reiches,  1896,  III,  Erganzung - 
sheft.  Cf.  le  Dictionnaire  du  commerce  de  Yves  Guyot  et  Raffalovich,  t.  I,  v° 
Allemagne. 


542 


ECONOMIC  HISTORY. 


Le  critErium  du  dEveloppement  de  l’industrie  n’est  pas  le 
nombre  des  Etablissements  industries  mais  bien  le  nombre 
des  ouvriers.  Or,  depuis  1875,  celui-ci  s’est  accrudans  la  pro¬ 
portion  de  61,66  %,  alors  que  l’ensemble  de  la  population  ne 
prEsentait  qu’un  accroissement  de  23,5  %.  .  . 

Est-il  besoin  d’ajouter  que  le  dEveloppement  de  la  produc¬ 
tion  a  une  importance  capitale  dans  la  situation  Economique 
de  l’Allemagne.  Comme  il  y  a  encore  insuffisance  de  con- 
sommation  chez  les  masses  populaires,  cette  production  in¬ 
tense  ambnerait,  si  l’on  ne  trouvait  des  debouches  au  dehors, 
une  sorte  d’encombrement  bien  autrement  dangereux  pour  le 
pays  que  celui  dont  on  se  plaint  dEja  aujourd’hui. 

Les  Economistes  prEtendent  que  plus  le  marchE  est  Etendu, 
plus  les  conditions  de  production  sont  compliquEes,  plus  les 
crises  gEnErales  sont  par  suite  frEquentes  et  profondes.  Et 
pourtant  malgrE  l’extension  de  son  marchE,  l’Allemagne  n’a 
point  depuis  un  certain  temps  dEja,  de  crise  vraiment  grave  a 
supporter.  Avec  cette  disposition  a  l’Etude  scientifique  des 
questions  qui  les  caractErise,  les  Allemands  ont  su  embrasser 
d’un  coup  d’oeil  assez  juste  la  consommation  et  la  production 
pour  ne  plus  s’engager,  comme  ils  l’avaient  fait  dans  la  pEriode 
du  Grunclerthnm ,  de  la  fibvre  d’affaires,  dans  des  entreprises 
exagErEes.  Et  il  s’est  en  somme  Etabli  entre  la  production  et 
la  consommation  un  Equilibre  que  constatent  les  rapports  con¬ 
sulates,  fran§ais  et  Strangers. 

“  Il  serait  malaisE,”  lit-on  dans  un  des  derniers  rapports  du 
consul  de  Belgique  a  Leipzig,  “  d’assigner  une  durEe  dEterminEe 
a  V excellent  etat  de  choses  actuel.  Gr&ce  a  la  bonne  marclie  des 
affaires,  plusieurs  branches  ont  pris  une  extension  telle  qu’il 
y  a  lieu  de  craindre  les  effets  de  la  surproduction  dans  un 
avenir  peu  EloignE.  .  .  Un  rEel  optimisme  continue  a  rEgner 
dans  les  cercles  compEtents  ;  on  semble  admettre  que  les  circon- 
stances  actuelles  doivent  durer  encore  une  sErie  d’annEes,  et 
l’on  envisage  un  revirement  sous  ce  rapport  comme  une  loin- 
taine  Eventuality.”  1 

MEme  note  dans  les  rapports  anglais  qui  se  demandent  avec 
inquietude  quelies  sont  les  causes  de  cette  Etonnante  pros- 

1  Recueil  consulaire  du  royaume  de  Belgique ,  t.  XCVI,  1897,  p  45. 


L'ESSOR  INDUSTRIE L  DE  VALLEMA GNE.  543 


p^ritA  L’expos4  des  motifs  sur  lequel  le  gouvernement  im¬ 
perial  appuie  sa  demande  de  credits  pour  raugmentation  de 
la  flotte  renferme  aussi  d’int4ressants  details  sur  le  developpe- 
ment  du  commerce  allemand  a  l’^tranger,  et  notamment  dans 
les  pays  d’outre-mer.1  C’est  m§me  l’extension  des  int^rets 
allemands  sur  toute  la  surface  du  globe  qui  forme  le  principal 
argument  invoqu£  en  faveur  de  l’accroissement  de  la  marine 
de  guerre. 

Tandis  que  la  population  de  l’Allemagne  a  depuis  1871 
augment4  de  30  %,  le  commerce  ext^rieur  a  augments  dans 
le  meme  temps  de  60  %.  Dans  ce  mouvement  ascensionnel 
c’est  la  navigation  maritime  qui  figure  pr£cis4ment  au  premier 
rang.  Le  commerce  maritime  forme  h  lui  seul  66  %  de 
tout  le  commerce  ext4rieur.  De  1873  a  1895  le  tonnage  de  la 
marine  marchande  allemande  a  augment^  de  124  %.  Et  si 
Ton  examine  l’augmcntation  au  point  de  vue  des  pays  de 
destination  on  constate  que  c’est  surtout  le  commerce  avec  les 
pays  d’outre-mer  qui  a  prosp4r4  :  c’est  ainsi  que  l’augmentation 
pour  les  Etats-Unis  est  de  128  %  ;  pour  le  Mexique,  1’ Anti¬ 
que  centrale  et  l’Am^rique  du  Sud,  elle  est  de  317  % ;  pour 
les  Indes  et  l’Extreme-Orient,  de  480  %;  pour  l’Australie, 
de  475  %.  En  Europe  meme  la  progression  est  de  119  % 
pour  les  pays  du  Nord,  de  88  %  pour  la  Grande-Bretagne, 
de  60  %  pour  le  Sud-ouest  du  continent.2 

Les  ann^es  1897  et  1898  qui  ont  4td  fort  troubles  dans 
beaucoup  de  pays  ont  4te  en  somme  tres  bonnes  pour  le  com¬ 
merce  allemand.  Toutes  les  grandes  industries,  sauf  l’indus- 
trie  textile,  ont  fait  das  progrks.  Si  les  benefices  ont  4t4  un 
peu  moindres  en  1898,  c’est  par  suite  d’une  augmentation 
notable  des  salaires,  et  aussi  du  rench4rissement  des  prix  d’un 
certain  nombre  de  matures  premieres,  mais  en  somme  la  vie 
commerciale  a  dt4  tres  intense.  Tous  les  rapports  consulates, 
et  la  plupart  de  ceux  des  chambres  de  commerce  sont  d’accord 
a  cet  dgard.  On  ne  peut  donner  de  meilleure  preuve  de  la 

1  M.  Eugene  Cor  en  donne  un  excellent  resume  dans  le  Moniteur  officiel  du, 
commerce,  du  6  janvier  1898. 

2  Sur  le  mouvement  maritime  et  commercial  en  France  a  la  meme  epoque,  v. 
l’article  de  M.  d’Outrevienne,  Revue  politique  et  parlementaire ,  10  novembre  1897, 
p.  378. 


544 


ECONOMIC  HISTORY. 


prosp6rit4  dconomique  en  1898  que  les  chiffres  concernant  la 
fondation  des  socidtes  industrielles.  II  lie  s’en  est  pas  cree 
moins  de  329  avec  un  capital-actions  de  463.620.000  marcs. 
Aucune  annde  antdrieure  n’avait  fourni  jusqu’a  present  un 
contingent  aussi  dlevd.  Ce  sont  les  socidtds  mdtallurgiques 
(au  nombre  de  53)  qui  occupent  le  premier  rang.1 

Les  chiffres  ddja  connus  pour  la  prdsente  annde  (1899)  sont 
trds  satisfaisants  et  attestent  un  nouveau  progrds.  Ainsi  en 
1898  il  avait  dtd  crdd  pour  343  millions  de  marcs  de  valeurs 
industrielles,  correspondant  (car  les  Emissions  sont  faites 
naturellement  au-dessous  du  pair)  a  un  total  de  477  millions 
de  marcs.  Or  pendant  le  ler  semestre  1899  il  y  a  ddja  eu  des 
Emissions  pour  275  millions  de  marcs  correspondant  a  un  capi¬ 
tal  nominal  de  453  millions  de  marcs !  Ces  chiffres  sont  ddj& 
quintuples  de  ceux  de  1894.2 

Cet  essor  dconomique  de  l’Empire  allemand  doit  nous  frap- 
per  d’autant  plus  que  pendant  longtemps  PAllemagne  ne  fut 
pas  un  pays  industriel.  Les  villes  allemandes  eurent  sans 
doute  au  moyen  age  leurs  jours  de  prospdritd  et  de  gloire, 
mais  au  siecle  dernier,  a  la  suite  des  bouleversements  que  la 
guerre  de  Trente  ans  avait  occasion's  dans  tout  le  pays, 
l’industrie  y  etait  dans  une  complete  decadence.  Les  guerres 
de  la  Revolution  et  de  l’Empire  comprimerent  ensuite  les 
tentatives  de  insurrection.  Apres  1815,  la  renaissance  des 
id^es  particularistes  fut  un  autre  obstacle ;  les  barrieres  et  les 
douanes  interieures  ne  s’abaisserent  que  lentement ;  la  legis¬ 
lation  surtout  ne  fut  guere  favorable  au  progres  economique. 

C’est  depuis  que  l’oeuvre  d’unification  s’est  accomplie,  c’est- 
a-dire  depuis  un  quart  de  siecle,  court  espace  de  temps  dans 
la  vie  d’un  peuple,  que  l’essor  industriel  et  commercial  de 
PAllemagne  s’est  brusquement  accentud.  Bismarck  n’avait 

1  Rapport  de  M.  Pingaud,  Moniteur  officiel  du  commerce ,  9  mars  1899,  p.  376, 
d’apres  les  statistiques  reunies  par  le  Deutscher  (Ekonomist. 

2  “  Nous  avons  en  ce  moment,”  me  disait,  il  y  a  quelque  mois,  un  ingenieur 
allemand,  “  une  telle  quantite  de  commandes,  particulierement  de  la  part  de 
l’etranger,  que  pour  longtemps  encore  notre  production  peut  s’accroitre  en  toute 
confiance.”  V.  sur  les  progres  nouveaux  qui  se  sont  accomplis  en  1899  les  Volks- 
virthschafViche  Chroniken  des  JaKrbucher  fur  Nationalcekonomie  und  Stutistik,  t. 
XVII,  1899,  pp.  67,  97  ;  t.  XVIII,  p.  227,  et  le  Deutsches  Handelsarchiv. 


L'ESSOR  INDUSTRIE L  DE  L’ALLEMAGNE.  545 


pas  manqu4  de  se  faire  ministre  du  commerce  et  de  declarer 
qu’aprks  les  victoires  militaires  il  entendait  bien  donner  a  son 
pays  les  victoires  4conomiques.  Depuis  1870  le  nouvel  Em¬ 
pire  s’est  couvert  d’usines,  de  fabriques,  de  manufactures  de 
toute  sorte.  Quelle  que  doive  §tre  au  xxe  si&ele  la  place  que 
prendra  d^finitivement  l’Allemagne  dans  le  monde,  l’essor 
industriel  et  commercial  du  peuple  allemand  ne  restera  pas 
moins  l’un  des  traits  saillants  de  la  fin  du  xixe. 


35 


X 

»  -  - 


546 


ECONOMIC  HISTORY . 


XX. 


THE  AMERICAN  LEGAL  TENDER  PAPER. 


CHARLES  F.  DUNBAR. 


From  Quarterly  Journal  of  Economics,  XI,  April  1897, 

pp.  223-247. 


HE  legal  tender  notes  of  the  United  States  present  now, 


as  they  always  have  presented,  an  appearance  of  great 
simplicity.  There  are  still  but  two  such  issues,  the  United 
States  notes  of  the  Civil  War  and  the  coin  notes  of  1890: 
their  legal  tender  power  has  few  exceptions,  and  the  obliga¬ 
tion  for  their  redemption  is  to  be  read  in  a  few  lines.  Take 
away  the  confusing  element  introduced  by  the  silver  agitation, 
which  is  quite  extraneous  to  the  original  conception  of  the 
legal  tender  paper,  and  what  is  in  itself  better  suited  for  easy 
comprehension  or  has  more  prima  facie  attractions  than  a  sys¬ 
tem  of  government  notes,  established  by  the  authority  and 
resting  on  the  credit  of  the  nation  ? 

But,  simple  as  the  notes  themselves  may  appear,  it  is  by  no 
simple  process  that  the  conditions  under  which  they  are  now 
issued  have  been  arrived  at.  Our  legislation  on  this  subject 
now  covers  a  period  of  thirty-five  years.  During  that  time 
there  has  been  a  rapid  succession  of  important  legislative  acts 
bearing  upon  the  legal  tender  paper  and  some  administrative 
acts  of  equally  serious  import.  The  system,  as  we  have  it 
to-day,  is,  therefore,  a  product,  not  of  any  compact  declara¬ 
tion  by  the  law-making  power,  but  of  a  singularly  complex 
series  of  laws  and  executive  orders.  It  is  to  some  aspects  of 
this  series,  —  or,  in  other  words,  to  some  aspects  of  the  history 
of  the  legal  tender  issues,  —  and  to  some  considerations  flow¬ 
ing  therefrom,  that  I  desire  to  direct  the  attention  of  readers  of 


THE  AMERICAN  LEGAL  TENDER  PAPER .  547 

/ 

this  article.  Accepting  the  constitutionality  of  the  legal  ten¬ 
der  acts,  as  settled  by  the  repeated  decisions  of  the  Supreme 
Court,  and  waiving  all  questions  as  to  the  necessity  of  the 
acts  or  of  either  of  them,  as  foreign  to  my  present  subject, 
I  wish  to  inquire  what  inferences  are  to  be  drawn  from  the 
manner  in  which  the  authority  of  Congress  has  been  exer¬ 
cised,  and  how  far  the  prima  facie  attractions  of  our  paper 
legal  tender  are  thereby  affected.  For  this  purpose,  it  will 
be  necessary  to  make  a  short  recapitulation  of  the  chief  legis¬ 
lative  and  executive  acts  which  mark  the  period  opened  by 
the  first  Legal  Tender  Act  and  relate  to  the  same  subject- 
matter,  and  to  do  this  even  at  the  risk  of  stating  much  with 
which  the  reader  must  be  supposed  to  be  familiar. 

1.  The  leading  advocates  of  the  act  of  February  25,  1862, 
pressed  that  measure  upon  Congress  as  a  temporary  expedient 
forced  upon  the  country  by  the  stress  of  war  (1861-62,  ch. 
33).  They  also  pressed  it  as  a  measure  which  had  its  place 
in  a  large  scheme  of  legislation,  by  which  they  expected  to 
provide  a  permanent  paper  currency  exclusively  of  bank  notes. 
To  meet  the  urgent  needs  of  the  Treasury,  a  limited  amount 
of  legal  tender  notes  were  to  be  issued,  exchangeable  at  the 
pleasure  of  the  holder  for  United  States  bonds,  and  the  bonds 
were  to  be  made  the  basis  of  a  bank  currency.  Issued,  ex¬ 
changed,  and  reissued,  the  notes  were  expected  to  open  a 
market  for  a  large  amount  of  bonds,  and  finally  to  be  absorbed 
and  disappear.  It  may  be  doubted  whether  the  majority  in 
Congress  were  then  ready  to  accept  the  whole  of  this  com¬ 
prehensive  scheme,  but  there  is  no  doubt  that  the  majority 
agreed  to  the  issue  as  something  not  intended  long  to  survive 
the  exigency  which  called  it  into  being.  Even  with  this  re¬ 
stricted  view  of  the  scope  of  the  legislation,  the  provision 
making  the  notes  exchangeable  for  bonds  was  plainly  a  matter 
of  prime  importance.  It  was  looked  upon  as  offering  a  possible 
outlet  for  the  notes  in  case  the  circulation  were  over-loaded 
with  them,  and  it  provided  the  means  for  their  withdrawal  when 
the  present  need  should  have  passed  by  and  the  public  credit 
should  have  begun  to  advance.  The  bonds  having  been  made 


548 


ECONOMIC  HISTORY. 


coin  bonds,  the  exchangeability  of  the  notes  was  the  ground 
of  hope  for  their  present  credit  and  ultimate  redemption. 

2.  But  the  expectations  of  the  advocates  of  the  first  Legal 
Tender  Act  were  disappointed.  Although  some  sanguine 
leaders  had  predicted  that  the  whole  of  the  first  issue  would 
not  be  used,  a  second  issue  was  called  for  by  the  Treasury, 
and  a  third.  It  was  also  discovered  that,  so  long  as  notes 
could  be  exchanged  for  bonds  at  par,  the  price  of  bonds  could 
not  rise  above  that  point,  and  that  with  this  limitation  of  pos¬ 
sible  profit  the  present  inducement  for  exchange  was  too  small 
to  invite  large  operations.  At  the  instance  of  the  Treasury, 
therefore,  and  in  order  to  facilitate  the  sale  of  bonds,  Con¬ 
gress,  in  the  Ways  and  Means  Act  of  March  8,  1863,  declared 
that  the  right  to  exchange  the  notes  should  cease  from  the 
first  day  of  the  following  July  (1862-63,  ch.  73,  §  3).  One 
year,  therefore,  saw  the  central  provision  of  the  original  sys¬ 
tem  abolished,  and  without  debate  in  either  House.  “  This 
act,”  says  Mr.  Sherman,  in  one  of  his  numerous  references  to 
the  subject,  “though  convenient  in  its  temporary  results,  was 
a  most  fatal  step,  and  for  my  part  in  acquiescing  in  and  vot¬ 
ing  for  it  I  have  felt  more  regret  than  for  any  other  act  of  my 
official  life.”  1 

3.  The  summer  of  1864  saw  the  worst  fears  as  to  a  resort 
to  a  paper  legal  tender  fully  justified.  At  the  end  of  June  the 
outstanding  United  States  notes  were  $431,000,000  ;  there 
were  also  in  circulation  $168,000,000  of  interest-bearing  notes 
which  were  a  legal  tender  for  their  face  ;  and,  in  response  to 
the  urgent  demand  of  the  Treasury,  authority  for  an  addi¬ 
tional  issue  of  $200,000,000  of  similar  interest-bearing  legal 
tender  notes  was  to  be  embodied  in  the  Ways  and  Means  Act. 
Gold,  which  in  April  stood  at  180,  was  starting  on  the  rapid 
ascent  which  carried  it  to  240  on  the  1st  of  July.  Congress 
was  engaged  in  an  unsuccessful  effort  to  prevent  time-sales  of 
gold  and  of  foreign  exchange,  by  means  of  what  has  been 
known  as  “  The  Gold  Bill ;  ”  and  confusion,  distrust,  and  dis¬ 
credit  were  rapidly  gaining  ground.  As  a  reassuring  measure, 
therefore,  to  quiet  public  alarm,  a  clause  was  incorporated  in 

1  Speech  in  the  Senate,  March  6,  1876  ;  to  be  found  in  his  “  Speeches p.  496. 


THE  AMERICAN  LEGAL  TENDER  PAPER.  549 


the  Ways  and  Means  Act  declaring  that  the  total  amount  of 
United  States  notes  should  never  exceed  $400,000,000,  and 
a  possible  temporary  addition  of  $50,000,000,  if  required  for 
the  payment  of  private  deposits  then  held  by  the  Treasury 
(1863-64,  ch.  172,  §  2).  This  limitation  of  the  issue  of 
United  States  notes  was  a  wise  concession  to  public  opinion, 
and  without  doubt  had  its  influence  in  the  next  few  months 
in  raising  the  public  credit ;  but  the  ability  of  Congress  to 
maintain  such  a  restriction  under  the  pressure  of  any  great 
exigency  was  never  put  to  a  severe  test,  and  the  happy  ending 
of  the  war  nine  months  later  abruptly  introduced  an  entirely 
new  order  of  questions  relating  to  the  legal  tender  issues. 

4.  So  far  as  the  temper  of  the  public  was  concerned,  the 
first  months  of  peace  were  remarkably  favorable  for  measures 
looking  towards  specie  payment  and  the  withdrawal  of  the 
legal  tenders  ;  and  it  was  probably  a  misfortune  that  Congress 
was  not  then  in  session  to  improve  a  moment  which  in  other 
respects  was  opportune,  and  to  do  this  before  the  apprehen¬ 
sion  of  contraction  or  any  of  the  real  dangers  of  that  process 
should  be  seriously  felt.  But  when  Congress  met  in  Decem¬ 
ber,  1865,  —  after  the  announcement  of  his  policy  by  Secretary 
McCulloch,  —  the  strength  of  feeling  was  still  such  that,  by  a 
vote  of  144  to  6,  the  House  of  Representatives  adopted  a  reso¬ 
lution  of  cordial  concurrence  u  in  the  views  of  the  Secretary  of 
the  Treasury  in  relation  to  the  necessity  of  a  contraction  of 
the  currency  with  a  view  to  as  early  a  resumption  of  specie 
payments  as  the  business  interests  of  the  country  will  permit,” 
and  pledged  its  co-operation  to  that  end. 

5.  A  secretary  gifted  with  tact  in  dealing  with  other  men, 
and  standing  aloof  from  the  political  contests  of  the  time, 
might  perhaps  have  made  this  proffer  of  concerted  effort  the 
basis  of  a  successful  policy ;  but  Mr.  McCulloch  had  not  that 
tact,  and  was  so  far  identified  with  the  reconstruction  policy 
of  President  Johnson  as  to  share  the  odium  incurred  by  the 
latter  in  his  struggle  with  Congress.  Four  months  after  the 
declaration  of  December,  1865,  Congress,  in  making  provision 
for  the  retirement  of  Treasury  notes,  forbade  the  Secretary 
to  retire  more  than  $10,000,000  of  United  States  notes  within 


550 


ECONOMIC  HISTORY. 


the  next  six  months,  or  more  than  $4,000,000  in  any  one 
month  thereafter  (1865-66,  ch.  28). 

6.  The  Secretary  did  not  use  to  its  full  extent  the  authority 
allowed  him  by  Congress.  The  Commercial  revulsion  which 
began  in  London  in  1866  was  followed  by  continued  depression 
in  this  country,  the  public  mind  became  more  and  more  sen¬ 
sitive  on  the  subject  of  contraction,  and  wild  demands  began 
to  be  made  for  the  payment  of  the  five-twenty  bonds  in  legal 
tender  notes.  The  Finance  Committee  of  the  Senate  in 
December,  1867,  reported  a  bill  providing  for  the  exchange 
of  these  bonds  for  a  five  per  cent,  coin  bond,  the  offer  resting 
upon  the  avowed  calculation  that  the  right  of  the  public 
creditor  was  doubtful,  and  that  he  would  find  it  for  his 
advantage  to  take  a  bond  bearing  a  lower  rate  of  interest 
and  free  from  cloud.  In  the  discouraged  state  of  mind 
indicated  by  this  proposition,  Congress,  in  February,  1868, 
u  suspended  ”  altogether  the  authority  previously  given  to 
the  Secretary  “  to  make  any  reduction  of  the  currency  by 
retiring  or  cancelling  United  States  notes and  thus  the 
first  movement  for  a  return  towards  specie  was  peremptorily 
closed  (1867-68,  ch.  6).  The  notes  outstanding  had  been 
reduced  from  about  $400,000,000  to  $356,000,000;  but  this 
reduction  had  been  offset  by  an  increase  of  national  bank 
notes  during  the  same  months. 

7.  Happily,  the  Republican  National  Convention  in  July, 
1868,  planted  itself  on  firm  ground  as  to  the  payment  of  the 
five-twenty  bonds,  and  in  its  platform  denounced  “  all  forms 
of  repudiation  ”  and  called  for  the  payment  of  all  creditors, 
“  not  only  according  to  the  letter,  but  the  spirit  of  the  laws.” 
The  Democratic  party  a  few  weeks  later  gave  its  support  to 
what  was  supposed  to  be  the  popular  craze  of  the  day,  and 
upon  this  issue  and  others  was  badly  beaten.  General  Grant 
was  elected  after  an  excited  canvass ;  and  the  popular  verdict 
was  registered  in  an  “  Act  to  strengthen  the  Public  Credit,” 
approved  in  March,  1869,  being  the  first  act  passed  under  the 
new  administration.  This  law  declared  the  faith  of  the  United 
States  to  be  pledged  to  the  payment  of  both  notes  and  bonds 
in  coin,  except  when  the  law  under  which  they  were  issued 


THE  AMERICAN  LEGAL  TENDER  PAPER.  551 


had  expressly  provided  for  payment  otherwise,  and  closed  by 
further  pledging  the  faith  of  the  United  States  “to  make 
provision  at  the  earliest  practicable  period  for  the  redemption 
of  the  United  States  notes  in  coin”  (1869,  ch.  1). 

8.  Nothing  was  done  towards  giving  effect  to  this  pledge. 
Secretary  Bout  well  in  December,  1869,  suggested  that  authority 
should  be  given  for  reducing  the  circulation,  as  occasion  might 
offer,  by  an  amount  not  exceeding  $2,000,000  in  any  one 
month ;  but  it  was  clear  that  he  did  not  regard  the  matter 
as  of  any  present  importance,  arid  no  action  was  taken. 
Congress  had  apparently  acquiesced  in  the  policy  of  allowing 
the  country  to  “grow  up”  to  a  currency  admitted  to  be 
excessive.  A  year  or  two  later,  however,  it  appeared  that 
the  Treasury  had  on  more  than  one  occasion  issued  legal 
tender  notes  in  lieu  of  a  part  of  those  “  retired  and  cancelled  ” 
by  Secretary  McCulloch.  The  question  as  to  the  legality  of 
any  such  reissue  was  referred  by  the  Senate  to  its  Finance 
Committee ;  and  the  majority  of  that  committee,  headed  by 
Mr.  Sherman,  reported  a  resolution  that  the  Secretary  “  has 
not  the  power  under  existing  law”  to  issue  notes  for  any 
portion  of  those  retired  under  the  act  of  1866.  The  question 
involved  was  of  moment ;  for,  if  $5,000,000  could  be  issued 
by  the  Secretary  at  his  discretion,  so  could  $44,000,000,  and 
the  whole  of  the  ground  supposed  to  have  been  gained  by  the 
payment  of  this  form  of  debt  might  thus  be  lost.  The  resolu¬ 
tion,  however,  was  not  called  up  for  action,  and  at  the  end  of 
the  session  the  Secretary  might  easily  have  felt  that  his  action 
had  the  tacit  acquiescence  of  Congress. 

9.  Mr.  Boutwell’s  successor,  Secretary  Richardson,  having 
paid  out  in  the  revulsion  of  18T3  a  large  part  of  his  cash 
balance  in  the  vain  effort  to  relieve  the  money  market  by  the 
purchase  of  bonds,  soon  found  himself  so  crippled  by  the 
decline  of  revenue  that  in  October,  1873,  he  began  paying  out 
the  retired  notes  for  ordinary  expenses ;  and  this  reissue  was 
continued  until  at  the  beginning  of  February,  1874,  when 
the  revenue  had  recovered  from  its  collapse,  $26,000,000 
of  the  notes  were  again  in  circulation,  raising  the  total  to 
$382,000,000. 


552 


ECONOMIC  HISTORY . 


10.  At  the  long  session  of  1874  Congress  first  passed  the 
so-called  inflation  bill,  vetoed  by  President  Grant,  by  which 
the  issue  of  legal  tender  notes  was  to  be  increased  to 
8400,000,000  and  the  possible  issue  of  national  bank  notes 
was  to  be  raised  to  the  same  point,  and  then  adopted  the 
Compromise  Act  of  June,  1874,  by  which,  among  other  pro¬ 
visions,  it  was  declared  that  the  amount  of  legal  tender  notes 
should  be  fixed  at  8382,000,000  (1873-74,  ch.  343,  §  6).  The 
amount  reissued  by  Secretary  Richardson  was  thus  made  a  part 
of  the  permanent  currency,  and  so  remained  until  the  work  of 
withdrawal  began  anew  under  the  Resumption  Act  of  1875. 

11.  The  Resumption  Act  was  not  prepared  with  open 
doors ;  and,  doubtless,  there  is  much  in  its  secret  history 
which  would  be  of  great  interest.  Certainly,  its  public 
history,  if  we  view  it  as  a  measure  for  financial  reform,  is 
unique.  The  bill,  introduced  by  the  Finance  Committee 
of  the  Senate,  was  admitted  to  be  the  work  of  a  party  caucus, 
in  which  no  agreement  could  be  reached  except  by  consenting 
to  leave  a  principal  point  unexplained.  Whether  legal  tender 
notes,  when  “  redeemed  ”  in  the  language  of  the  bill,  could  be 
reissued  or  not,  Mr.  Sherman,  who  had  charge  of  the  measure, 
steadily  refused  to  say,  knowing  well  that  any  explicit  answer 
would  drive  off  one  wing  or  the  other  of  his  expected  majority, 
and  deeming  it  his  business  to  carry  the  bill  through  by  what¬ 
ever  means.  It  was  passed  by  the  Senate,  therefore,  with  an 
obstinate  refusal  on  the  part  of  its  chief  advocate  to  state  the 
meaning  and  effect  of  its  leading  provision.  In  the  House 
all  risk  of  explanation  was  avoided,  by  forcing  the  bill  through 
without  debate  under  the  operation  of  the  previous  question ; 
and  thus  the  great  work  of  resumption  was  entered  upon, 
with  absolutely  no  authoritative  determination  of  the  main 
question  whether  redemption  would  end  the  legal  tender 
currency  or  not  (1874-75,  ch.  15).  It  was  only  certain  that, 
when  the  measure  should  finally  be  interpreted  for  purposes 
of  administration,  one  section  or  the  other  of  its  supporters 
would  meet  with  bitter  disappointment. 

12.  As  a  preparation  for  actual  specie  payment  in  1879, 
the  Resumption  Act  provided  for  a  gradual  reduction  of  out- 


THE  AMERICAN  LEGAL  TENDER  PAPER.  553 


standing  legal  tender  notes  from  $382,000,000  to  $300,000,000, 
so  far  as  such  a  reduction  could  be  offset  by  the  issue  of 
national  bank  notes  by  new  banks,  or  by  old  ones  increasing 
their  circulation.  This  device  for  avoiding  a  contraction  in 
the  total  currency  was  defeated  by  an  unexpected  surrender 
of  bank  circulation  under  the  pressure  of  the  times  ;  and  the 
consequent  net  reduction  of  legal  tender  notes  and  bank  notes 
came  to  be  regarded  in  some  parts  of  the  Union  as  the  cause 
of  the  depression,  which  deepened  in  this  country  in  1876 
and  1877  as  it  did  in  the  greater  part  of  Europe.  When 
Congress  came  together  in  October,  1877,  a  bill  was  at  once 
reported  to  the  House  by  the  Committee  on  Banking  and 
Currency  to  repeal  the  third  section  of  the  Resumption  Act, 
this  section  containing  all  the  provisions  as  to  the  redemption 
of  the  United  States  notes.  With  an  amendment  exempting 
from  repeal  the  provision  for  free  banking,  this  bill  was 
passed  in  the  House  and  went  to  the  Senate.  That  body 
amended  the  House  bill  so  as  to  make  it  simply  a  bill  for 
making  United  States  notes  receivable  in  payment  for  the 
four  per  cent,  bonds  and  also  for  customs  duties,  and  finally 
passed  it  in  this  form  in  the  following  June  by  a  vote  of  45 
to  15.  But,  while  this  measure  was  pending  in  the  Senate, 
and  in  view  of  the  probable  disagreement  of  the  two  Houses, 
the  mover  of  the  House  bill  introduced  there  a  short  bill  to 
forbid  the  further  retirement  of  legal  tender  notes ;  and  this 
was  hurriedly  passed  through  both  House  and  Senate,  and 
became  a  law  May  31, 1878  (1877-78,  ch.  146).  This  moment¬ 
ous  act,  which  finally  settled  the  question  as  to  the  meaning 
of  “  redemption  ”  in  the  Resumption  Act  and  completed  the 
conversion  of  the  United  States  notes  into  a  permanent  cur¬ 
rency,  —  an  act  scarcely  inferior  in  its  importance  to  the 
Resumption  Act  itself, —  was  adopted  almost  without  debate. 
The  issue  at  that  moment  stood,  as  it  stands  at  present,  at 
$346,681,016. 

13.  The  reserve  of  gold,  accumulated  for  the  redemption 
of  legal  tender  paper  under  these  changed  conditions,  received 
a  tardy  recognition  from  Congress  in  1882,  when,  under  the 
act  for  extending  the  charters  of  the  national  banks,  it  was 


554 


ECONOMIC  HISTORY. 


provided  that  the  issue  of  gold  certificates  by  the  Treasury 
should  be  suspended  “  whenever  the  amount  of  gold  coin  or 
gold  bullion  in  the  Treasury  reserved  for  the  redemption  of 
United  States  notes  falls  below  one  hundred  millions  of 
dollars”  (1881-82,  ch.  290,  §  12).  No  means  of  replenishing 
this  reserve  have  ever  been  provided,  except  those  named  in 
the  Resumption  Act,  —  surplus  revenues  and  bonds  of  the  de¬ 
scriptions  authorized  by  the  Refunding  Act  (1869-70,  ch.  256). 

14.  The  winter  of  1889  and  1890  brought  a  fresh  outburst 
of  agitation  for  the  free  coinage  of  silver,  at  a  time  when  the 
compulsory  coinage  of  silver  dollars  under  the  Bland  Act  of 
1878  was  finally  submerging  the  Treasury.  The  result  of 
several  months  of  debate  in  Congress  was  the  passage  of  the 
Silver  Purchase  Act  of  1890,  by  which  Congress  required 
the  purchase  of  4,500,000  ounces  of  silver  per  month,  pay¬ 
ment  therefor  to  be  made  in  “  coin  notes,”  which  were  to  be 
a  legal  tender  and  to  be  withdrawn  from  circulation  only 
when  replaced  by  an  equal  amount  of  the  silver  dollars  (1889- 
90,  ch.  708).  This  provision  for  adding  to  the  legal  tender 
paper  is  the  only  part  of  the  act  which  there  is  occasion  to 
consider  here.  The  reduction  of  legal  tender  circulation  had 
been  made  impossible  by  the  act  of  1878;  and  Congress  now 
ordered  its  periodical  increase,  by  such  an  amount  as  should 
be  required  by  the  stated  purchases  of  silver,  without  limit, 
and  with  no  discretionary  power  of  suspension  in  any  exigency. 
It  was  declared  to  be  the  policy  of  the  United  States  to 
maintain  the  “  parity  ”  of  gold  and  silver ;  but  no  provision 
was  made  for  an  increase  of  the  gold  reserve  established  for 
the  protection  of  the  United  States  notes,  in  case  “  parity  ” 
meant  the  maintenance  of  the  gold  standard.  It  was  provided 
on  the  other  hand  that  the  coin  notes  might  be  redeemed  in 
silver  at  the  pleasure  of  the  Secretary,  so  that  the  decline  to 
the  silver  standard  appeared  to  be  a  matter  of  probable 
ultimate  necessity.  The  new  measure  was,  therefore,  a  sur¬ 
prising  sequel  to  the  long  effort  made  to  place  the  legal  tender 
notes  on  the  solid  footing  of  gold. 

15.  Not  many  months  had  passed  before  the  saturation  of 
the  currency  with  legal  tender  paper  and  silver  was  proved  by 


THE  AMERICAN  LEGAL  TENDER  PAPER.  555 

the  slackening  of  gold  payments  for  customs  duties.  In  the 
spring  of  1893  the  new  coin  notes  outstanding  had  risen  to 
$140,000,000,  and  the  increase  then  going  on  was  not  far 
.  short  of  $4,000,000  per  month ;  gold  receipts  at  New  York 
were  nearly  dried  up,  and  the  gold  reserve  in  the  Treasury 
was  falling  below  the  prescribed  $100,000,000.  The  visible 
danger  of  the  suspension  of  gold  payments  precipitated  the 
violent  monetary  panic  which  culminated  in  July.  Congress 
was  called  together  in  August  to  provide  the  means  of  financial 
safety,  and  the  repeal  of  the  clause  in  the  act  of  1890  re¬ 
quiring  the  purchase  of  silver  was  carried,  after  a  parliamen¬ 
tary  contest  which  lasted  for  eighty -two  days  (1893,  ch.  8). 

These  are  the  leading  points  in  the  history  of  a  currency 
now  old  enough  to  have  had  its  trial  in  every  variety  of 
national  fortune,  —  in  prosperity  and  in  adversity,  in  war 
and  in  peace.  As  an  exhibition  of  unsteady  purpose,  the 
record  appears  to  me  to  be  without  a  parallel,  considering 
the  gravity  of  the  subject-matter.  This  is  the  manner  in 
which  the  nation  has  dealt  with  the  paper  legal  tender  which 
practically  lies  at  the  base  of  the  great  mass  of  its  credit 
transactions,  —  used  concurrently  with  gold  no  doubt  at 
present,  but  for  many  years  used  almost  exclusively,  and 
possibly  in  some  contingency  destined  to  be  so  used  again. 
The  customary  paper  circulation,  which  should  rest  on  a  bed¬ 
rock  of  law  as  unchangeable  as  anything  of  human  institution 
can  be,  has  lain  upon  a  quicksand.  Instability  has  been  the 
leading  characteristic  of  our  legislation  on  this  subject  for  a 
third  of  a  century. 

If  we  consider  the  course  pursued  by  the  other  leading 
nations  in  their  management  of  currency  and  kindred  matters, 
the  contrast  is  remarkable.  England  has  made  no  important 
change  in  her  currency  system  for  over  fifty  years,  and,  not¬ 
withstanding  the  inviting  field  which  it  presents  for  the 
reformer,  still  prefers  not  to  risk  her  reputation  for  absolute 
safety  upon  possible,  but  still  uncertain,  improvements. 
France  has  kept  her  system  without  substantial  change, 
except  in  the  scale  of  its  operations,  ever  since  the  absorption 


556 


ECONOMIC  HISTORY. 


of  the  departmental  banks  by  the  Bank  of  France  in  1848. 
The  war  with  Germany,  suspension  of  specie  payments,  revolu¬ 
tion,  invasion,  and  defeat  tried  the  strength  of  her  legislation 
and  of  her  confidence  in  it ;  but  it  stands  to-day  nearly  as  it 
stood  before  18T0,  except  for  the  legal  tender  power  then 
given  to  the  notes  of  the  Bank  of  France.  Germany  laid  her 
course  in  her  coinage  and  bank  acts  of  1871  to  1875,  and  has 
followed  it  from  that  day  without  deviation,  her  occasional 
legislation  upon  this  subject  being  directed  steadily  to  the 
completion  of  the  system  as  originally  planned.  These  nations 
now  have  an  unfailing  confidence  in  the  steadiness,  perma¬ 
nence,  and  soundness  of  their  own  monetary  arrangements  ; 
and  a  chief  element  in  that  confidence  is  the  certainty  that 
serious  change  is  not  within  the  range  of  probability. 

This  contrast,  though  still  disadvantageous,  would  be  less 
painful  if  in  the  rapid  succession  of  changes  made  by  our 
government  there  were  discernible  any  approach  to  continuity 
of  purpose.  A  consistent  policy  might  be  developed  or  a 
system  might  grow  up  by  a  succession  of  short  stages,  and 
the  wisdom  of  the  process  might  be  justified  as  regards  its 
intention,  if  not  as  regards  its  skill.  But  no  such  continuity 
is  to  be  found  in  the  series  of  measures  recapitulated  above. 
Fundamental  principles  are  adopted  at  one  time  and  aban¬ 
doned  at  another.  The  automatic  absorption  of  notes  by 
bonds,  their  systematic  retirement  and  cancellation  by  the 
discretionary  authority  of  the  Treasury,  the  payment  of  them 
as  a  debt,  the  idea  of  fixity  of  amount,  and  that  of  an  adequate 
reserve  in  proportion  to  the  amount,  —  such  conceptions  as 
these  have  been  held  for  a  time,  then  dropped,  and  succeeded 
by  others,  perhaps  equally  short-lived.  The  series  of  acts,  as 
a  whole,  points  to  no  particular  end,  its  several  parts  have  no 
systematic  tendency  or  common  direction.  The  steps  taken 
have  been  without  logical  order,  and  the  important  con¬ 
sequences  following  have  often  been  neither  expected  nor 
desired.  The  line  traced  by  these  measures  is  in  fact  a 
legislative  zigzag,  not  a  line  of  development. 

When  we  inquire  for  the  cause  of  such  a  mortifying  result 
from  thirty-five  years  of  constantly  renewed  financial  anxiety 


THE  AMERICAN  LEGAL  TENDER  PAPER .  557 


and  debate,  we  must  find  it  in  the  general  absence  of  any 
sense  of  responsibility  for  the  formation  and  maintenance 
of  a  consistent  policy.  Not  many  of  our  Secretaries  of  the 
Treasury  have  found  it  worth  while  to  plan  and  act  for  any 
distant  future,  they  knowing  well  that  executive  initiative 
counts  for  but  little  in  the  end;  and,  moreover,  whatever 
secretaries  may  desire,  no  Congress  can  be  relied  upon  to 
carry  out  the  purposes  of  a  predecessor.  Inspection  of  the 
list  of  acts  shows  that  usually  some  accidental  conjuncture 
or  some  supposed  popular  demand  has  been  the  real  spring 
of  action  in  each  case,  and  that  for  the  individual  legislator 
a  supposed  mandate  for  the  passing  moment  has  generally 
been  enough  to  discharge  him  from  all  personal  responsibility. 

Consistency  in  the  popular  demand  is  not  a  characteristic 
of  our  politics.  The  American  people  can  be  relied  upon  with 
confidence  in  a  sufficiently  alarming  crisis,  finally  and  after 
great  travail,  to  rally  in  support  of  the  honest  and  wise  course 
in  any  matter  of  high  policy ;  but  this  result  is  often  reached 
only  after  a  season  of  painful  doubt  and  seeming  vacillation, 
and  after  much  mischief.  The  last  year,  for  example,  wit¬ 
nessed  the  latest  of  a  series  of  occasional  appeals  to  the  sound 
common  sense  of  the  plain  people,  in  which  the  result  was 
fortunate,  to  be  sure,  and  emphatic,  but  was  obviously  too 
long  left  in  uncertainty.  How  should  we  expect  the  sense  of 
legislative  responsibility  for  a  continuous  course  of  action 
to  be  developed  under  such  conditions  ?  How  can  we  wonder 
that  the  congressman  is  too  anxiously  mindful  of  the  shifting 
mass  of  opinion  behind  him,  on  which  his  political  future 
depends,  to  resist  the  passing  demand  for  change  ?  Or  why 
should  our  financial  legislation  be  less  changeable  and  incon¬ 
sistent  than  our  tariff  legislation,  in  which  we  are  now  expect¬ 
ing  the  third  radical  alteration,  not  to  say  revolution,  effected 
in  the  space  of  seven  years  ? 

Is  it  even  surprising  that,  on  the  whole,  the  net  result  of 
conflicting  financial  acts  should  be  a  general  weakening  of  our 
system  and  a  loosening  of  the  grip  upon  hard  money  ?  The 
fact  is  indubitable.  For  proof  of  it  we  need  only  compare, 
first,  the  condition  of  things  in  1865,  when  there  was  a  general 


558 


ECONOMIC  HISTORY. 


consensus  of  opinion  that  the  return  to  specie  payment  was 
a  manageable  problem  for  early  solution ;  second,  the  condi¬ 
tion  in  1875,  when,  after  a  year  of  painful  tergiversation, 
a  Resumption  Act  was  finally  carried  through  in  deference 
to  a  manifest  public  opinion,  although  by  means  of  an  agree¬ 
ment  that  its  terms  should  be  unintelligible;  and,  third,  the 
recent  state  of  affairs,  when  the  country  has  repeatedly  found 
itself  brought  dangerously  near  the  verge  of  afresh  suspension, 
and  has  still  found  it  impossible  to  obtain  a  line  of  legislation 
demanded  for  the  better  protection  of  the  national  honor  and 
well  being.  The  reason  for  this  irregular,  but  on  the  whole 
progressive,  relaxation  on  the  side  of  political  morals,  at  the 
same  time  that  we  have  secured  specie  payment,  is  not  far  to 
seek.  In  any  debate  where  the  fateful  words  “  contraction  ” 
and  “  relief”  are  heard,  the  fears  and  demands  of  a  sufficiently 
noisy  minority  have  extraordinary  potency,  especially  in  the 
even  years  which  witness  the  national  elections ;  and  ground 
once  lost  by  any  weakness  in  this  part  of  the  field  of  politics 
is  regained  with  great  difficulty.  The  country  is  now  and 
then  roused  to  the  fact  that  it  is  slipping  down  a  dangerous 
declivity ;  but,  after  all,  even  under  a  government  of  and  for 
and  by  the  people,  it  is  not  always  easy  for  the  clear  will  of 
the  majority  to  find  expression  in  law. 

It  is  not  to  be  assumed  that  the  cause  of  this  legislative 
incapacity  to  deal  firmly  with  a  subject  of  the  gravest  impor¬ 
tance  is  to  be  found  in  special  defects  of  character,  intellectual 
force,  or  proper  purpose  among  the  men  who  make  up  the 
Congress  of  the  United  States.  The  parliamentary  bodies 
in  other  countries  as  well  as  our  own  suffer  from  the  follies 
of  individual  members,  often  fail  to  do  their  duty,  and  are  the 
objects  of  criticism  and  satire.  Under  their  forms  of  parlia¬ 
mentary  government,  however,  they  are  in  a  measure  protected 
from  what  might  prove  to  be  their  own  incapacity,  —  some¬ 
times  by  traditional  modes  of  procedure,  sometimes  by  positive 
rules,  and  generally  by  established  forms  of  political  organiza¬ 
tion  and  leadership.  Without  the  defences  of  this  kind  which 
time  and  habit  have  thrown  around  the  House  of  Commons, 


THE  AMERICAN  LEGAL  TENDER  PAPER.  559 


that  body  might  easily  find  its  action  as  much  a  matter 
of  chance,  and  as  little  to  be  relied  upon  under  the  strain 
of  an  unsettled  public  opinion,  as  that  of  the  House  of 
Representatives.  Add  to  the  differences  in  customary  pro¬ 
cedure  the  fact  that  it  is  our  usual  practice  to  elect  to  Congress 
no  one  who  is  not  a  resident  of  the  district  to  be  represented, 
—  so  that  disagreement  with  local  opinion  often  means  for 
the  member  not  merely  failure  at  a  new  election,  but  political 
death,  —  and  there  are  reasons  enough  why  Congress  should 
have  failed  so  conspicuously  to  frame  and  defend  any  consistent 
line  of  policy  as  to  the  paper  currency. 

A  few  words  should  also  be  said  here  as  to  a  phase  of 
popular  opinion  with  which  members  of  Congress  have  long 
had  to  reckon,  —  a  phase  of  opinion  singularly  persistent  and 
general,  showing  itself  in  an  extreme  dread  of  “  contraction.” 
The  long  depreciation  following  the  great  issues  of  United 
States  notes  during  the  war  impressed  upon  the  public  mind 
the  consequences  of  inflation,  so  deeply  that  the  lesson  is 
nearly  as  vivid  to-day  as  it  was  thirty  years  ago.  The  majority, 
no  doubt,  have  a  wholesome  dread  of  any  tendency  in  that 
direction;  and  a  minority,  perhaps,  desire  such  a  tendency 
in  some  form  or  other,  with  more  or  less  crude  notions  as  to 
controlling  the  results.  But,  whether  resisting  inflation  or 
favoring  it,  the  great  mass  of  our  people  clearly  have  a  strong 
belief  in  the  effect  of  quantity  upon  the  value  of  a  circulation ; 
and  this  appears  to  make  up  the  greatest  part  of  their  simple 
creed  as  to  money.  To  hold  the  currency  where  it  is  becomes 
the  ideal  of  steady  management ;  and  contraction  becomes  an 
evil  in  itself,  and  perhaps  more  dreaded  even  than  inflation, 
because  its  earlier  stages  are  more  painful. 

The  dread  of  contraction  was  the  one  argument  against 
resumption  which  had  any  strength  with  the  public;  and 
it  has  not  lost  its  power  since,  although  we  plainly  have 
the  whole  world  upon  which  to  draw,  if  our  own  supply  is 
below  our  needs.  A  morbid  anxiety  as  to  the  sufficiency 
of  the  currency  to-day  possesses  the  public  mind,  as  is  shown 
by  the  copious  statistics  with  which  the  government  publica¬ 
tions  constantly  strive  to  reassure  the  people,  and  by  the 


560 


ECONOMIC  HISTORY . 


frequent  efforts  of  Presidents  and  Secretaries  to  satisfy  public 
opinion  as  to  the  care  with  which  the  supply  of  currency 
is  insured.  No  other  country  of  importance  shows  this 
hypochondriac  anxiety  as  to  its  symptoms,  or  gives  a  tithe 
of  the  attention  given  by  ours  to  the  mere  quantity  of  its 
money ;  and  no  one  of  the  leading  commercial  countries, 
it  must  be  said,  is  either  so  favored  by  fortune  or  so  con¬ 
stantly  in  trouble  in  this  respect.  But  our  excessive  sensi¬ 
tiveness  on  this  point  is  obstinate :  it  has  apparently  been 
increased  by  the  course  of  the  discussion  as  to  silver,  and  we 
are  still  absolutely  unwilling  to  trust  to  the  operation  of 
natural  laws  for  the  adjustment  of  the  amount  of  our  active 
currency. 

The  necessary  conclusion  from  our  experience  with  the 
legal  tender  notes  plainly  is  that  a  government  currency, 
under  our  conditions,  is  an  unfit  subject  for  national  legisla¬ 
tion.  Many  subjects  required  legislation  in  the  heat  of  civil 
war,  which  are  recognized  as  having  no  place  in  time  of  peace ; 
many  powers  were  then  called  into  use  from  stern  necessity, 
which  have  been  laid  aside,  like  disused  weapons  consigned  to 
the  arsenal.  A  system  which  makes  the  usual  legal  tender 
of  the  country  a  subject  of  current  legislation  risks  too  much 
upon  the  chances  of  mistake,  attack,  and  uncertainty.  It  is  a 
familiar  and  useful  practice  in  our  legislative  bodies  to  recog¬ 
nize  some  subjects  as  fitted  for  treatment  by  general  laws,  in 
order  that  they  may  be  freed  from  the  uncertainties  and  may 
not  add  to  the  temptations  which  beset  the  work  of  every 
legislature.  The  case  of  the  paper  currency  of  the  country  is  * 
analogous  to  this,  in  that  for  safety  it  requires  to  be  placed 
upon  such  a  basis  as  shall  reduce  to  the  minimum  the  chances 
of  its  coming  up  for  action  and  shall  prevent  a  constantly 
recurring  anxiety  as  to  its  future. 

What  happens  with  a  paper  legal  tender  is  far  different 
from  the  course  of  legislation  as  to  the  legal  tender  coin. 
With  regard  to  the  latter  the  government  fixed  its  standard 
and  established  its  system  of  coinage  in  1792,  and  then  found 
at  the  most  only  two  occasions  for  legislation  as  to  other 


THE  AMERICAN  LEGAL  TENDER  PAPER.  561 


matters  than  mere  detail,  until  the  silver  question  presented 
itself  in  1878.  But  the  paper  legal  tender  never  has  been, 
and  it  is  safe  to  say  never  can  be,  put  upon  a  basis  where  it 
can  have  a  like  course  of  freedom  from  change.  Resting 
purely  upon  credit,  and  regarded  as  a  creation  of  money  by 
mere  act  of  Congress,  it  steadily  invites  alteration,  the  removal 
of  this  limit  or  that,  the  increase  of  its  amount,  or  the  altera¬ 
tion  of  its  coin  basis.  The  reserve  to  be  held  in  the  Treasury 
under  any  safe  adjustment  can  never  fail,  from  its  magnitude/ 
to  attract  the  covetous  gaze  of  the  schemers  who  throng 
around  the  great  source  of  government  bounty.  In  addition 
to  these  risks  to  which  the  paper  legal  tender  is  exposed, 
it  has  also  to  meet  those  arising  from  the  silver  controversy 
and  now  threatening  the  coin.  It  was  well  recognized  six 
months  ago  that  in  the  event  of  Mr.  Bryan’s  election  the 
legal  tender  paper  might  be  suddenly  lowered  to  the  silver 
standard,  by  the  mere  substitution  of  silver  redemption  for 
gold,  and  by  mere  executive  order.  It  is  not  fit  that  the 
paper  currency  of  the  country  should  thus  be  kept  adrift, 
or  that  the  people  of  the  country  should  be  called  upon  period¬ 
ically  to  rally  for  the  safety  of  something  which  fails  of  one  of 
its  main  purposes,  if  it  is  not  kept  free  from  any  suspicion 
of  danger. 

The  passage  of  the  Silver  Purchase  Act  of  1890  is  a  strik¬ 
ing  illustration  of  the  peril  of  the  present  situation.  Two 
explanations  have  been  given  of  the  causes  which  united 
a  majority  of  both  Houses  in  favor  of  an  act  which  proposed 
a  steady  dilution  of  the  paper  currency,  involving  the  ultimate 
suspension  of  gold  payments  and  final  degradation  of  our 
standard  to  the  level  of  silver.  One  explanation,  current  at 
the  time  and  long  afterwards,  was  to  the  effect  that  a  majority 
of  both  Houses  favored  the  free  coinage  of  silver,  that  Presi¬ 
dent  Harrison  could  not  be  relied  upon  to  veto  a  bill  framed 
for  that  purpose,  and  that  the  Insane  “  experiment  ”  of  buying 
the  domestic  product  of  silver  by  new  issues  of  paper  annually 
was  resorted  to  as  a  compromise,  in  dread  of  a  more  rapidly 
working  measure  and  one  which  would  leave  no  locus  peni- 
tentice.  The  other  explanation  —  given  in  the  Senate  nearly 


562 


ECONOMIC  HISTORY. 


a  year  ago  by  Senator  Teller  —  was  to  the  effect  that  the 
Silver  Purchase  Act  was  the  consideration  for  which  the 
silver  interest,  holding  the  balance  of  power  in  the  Senate, 
was  induced  to  give  its  support  to  the  Tariff  Act  of  1890,  then 
on  its  passage.  This  statement  of  the  transaction,  made  by 
one  who  did  not  hesitate  to  declare  himself  one  of  the  con¬ 
tracting  parties  in  the  case,  has  the  greater  intrinsic  proba¬ 
bility  ;  but,  be  that  as  it  may,  let  the  one  account  or  the  other 
be  the  correct  statement,  it  is  true  in  either  case  that  legisla¬ 
ture  and  executive  were  alike  ready  to  cut  the  paper  currency 
adrift  from  the  solid  standard  and  to  let  it  float  towards 
depreciation.  In  the  one  case  this  would  be  for  the  reason 
that  a  sound  currency  was  doomed  in  any  event ;  and  in  the 
other  case  for  the  reason  that  neither  Congress  nor  President 
regarded  its  sacrifice  as  anything  more  than  a  proper  make¬ 
weight,  to  be  thrown  in  for  the  sake  of  securing  a  higher  scale 
of  customs  duties. 

Is  there  another  country  in  the  world,  outside  of  South 
America,  in  which  a  paper  legal  tender,  with  all  the  pos¬ 
sibilities  implied  in  its  misuse,  would  be  dealt  with  in  this 
fashion  ?  The  election  of  1896  and  all  that  has  followed 
inspires  confident  hope  of  a  less  troubled  future  ;  but,  after 
all,  what  guarantee  have  we  that  the  amazing  defection  of 
1890  may  not  be  repeated  within  half  a  dozen  years  ?  Such 
an  untoward  result  would  mean  no  greater  revolution  than 
that  which  took  place  in  the  half-dozen  years  ending  with 
1890:  indeed,  it  may  be  doubted  whether  in  the  minds  of 
most  men  the  assurance  of  safety  is  not  sensibly  weaker  now 
than  it  was  before  that  year. 

The  case  of  1890  shows  the  peril  that  may  come  from 
positive  action  by  Congress,  and  the  last  three  years  have 
shown  with  equal  distinctness  the  dangers  to  be  feared  from 
its  inaction.  Since  the  beginning  of  1894  there  has  been  a 
necessity  for  the  periodical  replenishment  of  the  gold  reserve. 
Withdrawals,  sometimes  for  export  and  sometimes  from  pre¬ 
caution,  have  brought  the  stock  of  gold  down  to  the  danger 
point ;  and  it  has  been  filled  up  by  the  proceeds  of  successive 
loans,  amounting  to  over  8260,000,000.  It  is  immaterial 


THE  AMERICAN  LEGAL  TENDER  PAPER .  563 


whether  the  cause  of  this  steady  borrowing  for  the  payment 
of  a  debt  which  is  not  thereby  diminished,  is  to  be  found  in 
what  has  been  called  the  44  endless  chain  ”  of  notes  redeemed, 
reissued,  again  redeemed  and  again  issued,  or  is  to  be  found 
in  a  deficiency  of  revenue.  In  either  case  the  evil  was  fla¬ 
grant,  and  it  was  the  business  of  Congress  to  apply  an  appro¬ 
priate  remedy,  —  by  fresh  taxation  in  the  one  case,  or  by 
modifying  the  system  of  reissue  under  the  act  of  1878  in  the 
other.  But  it  will  be  within  the  recollection  of  every  reader 
that  Congress  found  itself  absolutely  unable  to  act.  Four 
times  the  necessity  for  borrowing  has  presented  itself,  with 
a  suspension  of  gold  payments  as  the  only  alternative.  On 
three  occasions  out  of  the  four  Congress  was  in  session  at  the 
critical  moment ;  but  it  uniformly  appeared  that  action  was 
out  of  the  question.  Grant  that  the  responsibility  for  failure 
lay  with  a  factious  few  and  not  with  the  majority,  and  the 
fact  still  remains  that  the  Congress  of  the  United  States  was 
unable  to  act  in  an  emergency  created  by  its  own  legislation. 
It  was  even  unable  to  apply  the  palliative  of  providing  for 
the  issue  of  shorter  bonds,  bearing  a  lower  rate  of  interest 
than  those  to  be  issued  under  the  act  of  1870,  a  bill  for  that 
purpose  passed  by  the  House  in  1896  having  been  converted 
by  the  Senate  into  a  bill  for  the  free  coinage  of  silver.  For 
three  years,  therefore,  the  credit  of  the  government  and  the 
standard  of  prices  and  payments  have  remained,  not  without 
defence,  —  for  the  executive  still  performed  its  duty  with  the 
means  afforded  by  the  half-forgotten  provision  in  the  Re¬ 
sumption  Act,  —  but  so  shaken  at  intervals  as  to  cause  constant 
dread,  sometimes  nearly  degenerating  into  panic. 

A  currency  which  is  exposed  to  such  dangers  as  these  can¬ 
not  be  called  safe  in  any  proper  sense  of  the  word.  The 
wealth  of  the  promissor  of  the  note  is  unspeakable,  but  from 
time  to  time  the  application  of  that  wealth  in  fulfilment  of 
the  promise  is  not  beyond  question.  The  power  to  enforce 
the  legal  tender  of  the  note  at  its  face  in  payment  of  debt 
is  absolute,  but  the  standard  of  its  value  has  never  been  made 
secure.  For  thirty-five  years  the  policy  of  the  law  in  regard 
to  this  currency  has  been  uncertain,  and  the  causes  of  this 


564 


ECONOMIC  HISTORY. 


uncertainty  have  gained  in  strength  and  multiplied  as  time 
has  gone  on.  One  ingenious  expedient  and  another  is  sug¬ 
gested  for  regulating  the  use  and  redemption  of  the  notes,  in 
the  hope  of  giving  them  steadiness  and  securing  somewhere 
a  power  of  control;  but  there  is  no  escape  from  the  fatal 
objection,  that  the  direct  power  of  legislation  is  not  only 
paramount  but  is  beyond  the  controlling  force  of  any  steady 
political  influence.  In  short,  not  only  is  there  no  guarantee, 
but  there  is  no  probability  that  the  history  of  these  issues,  if 
they  continue  for  another  generation,  will  be  any  less  checkered 
than  it  has  been  in  the  last.  Without  dwelling  upon  such 
forebodings,  however,  it  is  enough  to  say  here  that,  while  the 
very  foundation  of  all  credit  is  thus  left  doubtful,  neither 
the  credit  of  the  nation  nor  that  of  the  mass  of  its  citizens 
can  reach  its  proper  strength.  None  can  profit  by  such  un¬ 
certainty  except  those  whose  command  of  wealth  enables 
them  to  secure  themselves,  at  the  expense  of  others,  against 
the  hazards  of  the  future. 

The  necessary  alternative  to  the  issue  of  paper  currency 
by  the  government  is  the  delegation  of  this  function  to  banks 
and  the  complete  substitution  of  private  credit  for  public  as 
the  medium  of  exchange  in  domestic  operations.  A  large 
proportion  of  these  operations  are  already  performed  by  means 
of  bank  credit,  with  an  adjustment  to  the  needs  of  the  day 
which  is  nearly  automatic;  and  the  only  relief  from  the 
increasing  perils  of  the  present  situation  is  to  be  found  in 
the  same  direction.  This  reliance  upon  banks  would  not, 
necessarily,  mean  the  absorption  of  the  whole  right  of  paper 
issue  by  the  national  banks,  although  this  absorption  would 
have  much  to  recommend  it ;  but  it  would  clearly  imply  the 
confinement  of  the  right  to  banks  working  under  tolerably 
uniform  conditions,  as  the  guarantee  of  their  safety  and  wide 
credit,  and  therefore  presumably  under  some  kind  of  national 
regulation  and  supervision. 

Even  with  the  use  of  bank-notes,  then,  the  paper  currency 
must  continue  to  be  a  subject  of  national  legislation.  There 
is,  however,  an  important  distinction  in  the  kind  of  legislation 


THE  AMERICAN  LEGAL  TENDER  PAPER.  565 


called  for  by  government  paper  and  by  bank  paper  respectively, 
and  a  great  difference  in  the  risks  to  which  we  may  be  exposed 
in  the  two  cases.  Congress  has  had  the  national  bank  system 
before  it,  for  any  necessary  legislation,  for  almost  the  same 
length  of  time  as  the  legal  tender  issues ;  but  the  course  of 
action  in  the  two  cases  offers  no  point  of  resemblance.  In¬ 
consistent  and  essentially  weak  as  the  dealing  of  Congress 
with  the  legal  tender  issues  has  been,  its  legislation  as  to  the 
banks  has  on  the  whole  been  marked  by  steady  purpose,  has 
tended  to  complete  the  original  system,  and  as  a  general  result 
has  materially  strengthened  it.  Deservedly  or  not,  the  banks 
have  from  the  start  had  abundance  of  enemies,  in  Congress 
and  out  of  it ;  but  the  bank  legislation  if  not  uniformly  wise, 
has  been  sparing  in  amount  and  usually  directed  to  the 
details  rather  than  the  general  structure  and  credit  of  the 
system.  Comparison  shows  clearly  that  for  thirty  odd  years 
the  legislator  has  approached  bank  questions  from  an  entirely 
different  point  of  view  and  in  a  different  frame  of  mind  from 
that  which  has  led  him  to  such  unfortunate  results  in  acting 
upon  legal  tender  notes.  He  has  not  felt  the  same  tempta¬ 
tions,  he  has  not  been  under  the  same  outside  influences,  the 
pressure  of  the  times  has  not  turned  his  thoughts  in  the  same 
direction.  The  fundamental  difference  in  the  two  cases  is  no 
doubt  explained  by  La  Rochefoucauld’s  familiar  maxim,  “  that 
it  is  easier  to  be  wise  for  others  than  to  be  wise  for  one’s 
self.”  The  legislator  has  found  it  congenial  and  easy  to  hold 
others  to  the  strict  line  of  their  obligations  and  of  sound 
public  policy,  but  not  so  easy  to  observe  this  line  in  .deciding 
as  to  what  lay  within  his  own  hand.  His  greatest  folly  in 
dealing  with  the  banks  —  the  absurd  attempt,  made  by  Con¬ 
gress  in  1881  and  foiled  by  the  veto  of  President  Hayes,  to 
force  a  reduction  of  the  interest  of  bonds  held  bvthe  banks  — 
was  after  all  not  a  measure  of  relaxation  towards  them,  but 
one  of  severity. 

This  natural  tendency  of  Congress,  considered  merely  as  a 
collection  of  human  beings,  to  exact  more  from  others  than 
from  themselves,  is  undoubtedly  strengthened  by  the  kind 
of  presumption  established  in  the  popular  mind  to  the  dis- 


566 


ECONOMIC  HISTORY. 


advantage  of  any  corporation,  in  questions  of  responsibility  or 
of  seeming  conflict  of  interest.  The  national  banks  have  felt 
the  pressure  of  this  influence  against  them,  in  cases  where 
they  have  sought  for  changes  of  legislation  which  would  have 
been  for  the  general  advantage.  No  doubt  in  such  cases 
impartiality  of  judgment  would  better  have  befitted  the  legis¬ 
lator  than  unfavorable  prepossession ;  but,  after  all,  can  it  be 
doubted  that  the  disposition  to  say  “No”  has  had  an  im¬ 
portant  place  among  the  causes  for  the  general  steadiness 
of  our  bank  legislation  ?  To  hold  the  banks  to  their  obliga¬ 
tion  and  to  grant  them  few  favors  has  been  the  rule,  and 
the  existence  of  any  rule  analogous  to  this  in  dealing 
with  the  legal  tender  issues  would  have  given  an  entirely 
different  cast  to  that  unfortunate  chapter  of  our  history. 

The  nations  already  referred  to  as  able  to  manage  their 
currencies  successfully  and  quietly  have  all  done  this  by 
delegating  the  power  of  issue  to  banks.  They  have  estab¬ 
lished  their  banks  on  different  principles,  but  have  agreed  in 
the  general  policy  of  throwing  upon  them  certain  duties  and 
restricting  the  field  of  probable  legislation.  That  their  systems 
have  a  remarkable  steadiness  and  permanence  has  already 
been  pointed  out.  These  systems  they  also  strengthen  as 
time  goes  on,  not  so  much  by  legislation  as  by  practice,  by 
public  opinion,  and  by  the  establishment  of  traditions  of  duty 
on  the  part  of  the  banks  themselves.  Both  in  England  and 
in  France  the  legislative  power  takes  distinctly  the  attitude 
of  observation,  towards  an  establishment  which  is  conducted 
for  private  profit,  but  is  intrusted  with  a  quasi  public  function. 
In  Germany  the  imperial  control  of  the  Reichsbank  makes 
the  relation  somewhat  different,  and  yet  a  note  circulation  of 
remarkable  stability  has  been  built  up  there  on  the  basis  of 
private  capital  invested  in  order  to  earn  a  profit.  In  neither 
one  of  the  three  countries  does  the  regulation  of  the  currency 
present  itself  as  a  subject  for  ordinary  legislation. 

But  it  is  not  necessary  for  the  present  discussion  to  enter 
upor.  the  general  considerations  for  or  against  a  paper  cur¬ 
rency  consisting  of  bank  notes  alone ;  and  I  shall  only  call 


THE  AMERICAN  LEGAL  TENDER  PAPER.  567 


attention  here,  in  conclusion,  to  the  often-repeated  argument 
that  a  government  issue,  being  a  loan  without  interest,  results 
in  a  saving  to  the  Treasury  which  is  lost  when  the  right  of 
circulation  is  delegated  to  banks.  The  experience  of  the 
United  States  in  the  last  five  years  alone  presents  a  complete 
answer  to  this  penny-wise  reasoning.  In  that  space  of  time 
the  people  of  the  United  States  have  lost  by  shaken  confidence, 
discouraged  enterprise,  and  the  actual  ruin  of  thousands  of 
citizens,  resulting  from  the  mismanagement  of  their  currency, 
an  amount  beyond  all  comparison  with  the  annual  saving  of 
perhaps  112,000,000  made  by  them  at  the  Treasury.  The 
thrill  of  alarm  which  runs  through  the  country  whenever 
the  gold  reserve  dips  too  far  below  the  line,  or  when  there 
is  delay  or  doubt  in  applying  the  costly  remedy,  means  a  loss 
to  the  people  to  be  measured  only  by  scores  of  millions.  The 
monetary  panic  of  1893  alone,  by  its  direct  results  and  with¬ 
out  reference  to  the  stagnation  which  followed  it,  was  enough 
to  counterbalance  all  savings  of  interest  made  by  the  Treasury 
in  the  last  twenty  years. 

But  the  question  as  to  the  means  of  securing  the  safest 
paper  currency  is  one  in  which  the  consequences  to  the 
national  industry  and  prosperity  are  on  a  scale  so  vast  that 
any  attempt  at  pecuniary  measurement  appears  irrelevant,  — 
as  irrelevant  as  it  would  be  to  draw  from  the  post-office  deficit 
a  conclusion  as  to  the  maintenance  of  the  postal  service  by 
our  people.  No  such  calculations  are  needed  to  show  that 
our  people  cannot  afford  to  rest  content  with  a  system  which 
their  experience  for  a  generation  has  shown  to  be  radically 
unsafe.  So  long  as  such  a  system  continues,  its  history  must 
continue  to  repeat  itself.  Errors  made  in  the  past  will  be 
made  also  by  the  new  men  in  the  future ;  and  the  possibility 
that,  in  any  moment  of  popular  discouragement  or  passing 
delusion,  some  fresh  experiment  or  abandonment  of  whole¬ 
some  limitation  may  be  resolved  upon  in  haste,  but  with 
irreparable  results,  must  continue  to  be  a  standing  menace 
to  our  credit,  public  and  private. 


568 


ECONOMIC  HISTORY. 


XXI. 

THE  AMERICAN  IRON  INDUSTRY. 

F.  W.  TAUSSIG. 

From  The  Quarterly  Journal  of  Economics,  Feb.  1900, 

pp.  143-170. 

IN  the  following  pages  I  propose  to  consider  the  growth  of 
the  iron  industry  in  the  United  States  during  the  last 
thirty  years,  and  the  effect  on  it  of  the  protective  duties  which 
have  been  maintained  throughout  this  period.  The  rate  of 
growth  has  been  so  extraordinary,  and  has  been  attended  by 
changes  so  striking,  as  to  make  the  mere  chronicle  an  instruc¬ 
tive  chapter  in  economic  history.  We  see  here  at  work  on  a 
huge  scale  the  forces  which  have  transformed  modern 
industry,  and  get  vistas  of  new  social  problems,  as  well  as 
more  light  on  the  questions  which  chiefly  engaged  the  atten¬ 
tion  of  economists  a  generation  ago.  Both  for  the  interest  of 
the  subject  itself,  and  by  way  of  clearing  the  ground  for  the 
discussion  of  the  protective  duties,1  I  shall  first  describe  the 
revolution  which  has  taken  place  in  the  American  iron  and 
steel  industry,  proceeding  thereafter  to  those  aspects  of  the 
industry  which  are  especially  connected  with  the  tariff  con¬ 
troversy. 

Thirty  years  ago  Great  Britain  was  still  the  world’s  com¬ 
manding  producer  of  iron  and  steel.  Notwithstanding  half  a 
century  or  more  of  almost  continuous  protection,  the  United 
States  held  but  a  distant  second  place.  The  output  of  pig  iron 
in  the  old  country  in  1870  was  very  nearly  six  millions  of  tons  : 
that  in  the  new  country  was  but  little  over  a  million  and  a  half. 
But  between  1860  and  1870  the  product  in  the  United  States 

1  The  Quarterly  Journal  of  Economics,  Aug.  1900,  pp  475-508. 


THE  AMERICAN  IRON  INDUSTRY. 


569 


had  doubled,  —  a  geometrical  progression,  which,  if  maintained, 
must  soon  cause  all  rivals  to  be  distanced.  It  is  much  easier, 
however,  to  double  a  small  number  or  a  small  output  than  a 
large  one:  the  rate  of  growth  in  the  beginnings  of  a  move¬ 
ment  is  rarely  maintained  for  long  during  its  later  course. 
Yet  in  this  case  the  unexpected  happened :  for  three  decades 
the  geometrical  progression  was  maintained  in  the  output  of 
pig  iron  in  the  United  States.  The  product  of  18T0  had  been 
double  that  of  1860,  1880  doubled  1870,  and  1890  again 
doubled  1880.  The  iron  industry  of  Great  Britain  held  its 
own,  and,  indeed,  between  1870  and  1880  made  a  notable 
advance ;  but  it  could  not  match  the  astounding  pace  of  its 
young  rival.  In  1890  the  United  States  turned  out  more 
than  nine  million  tons  of  pig  iron,  for  the  first  time  passing 
Great  Britain,  and  displacing  that  country  suddenly  as  the 
leading  producer.  The  depression  which  followed  the  crisis 
of  1898  caused  a  sharp  decline  in  the  American  product,  the 
lowest  point  being  reached  in  1894.  But  with  the  revival  of 
activity  after  1896  the  figures  again  mounted,  reaching  near 
twelve  millions  in  1898,  and  fourteen  millions  in  1899.  The 
year  1900  will  hardly  show  a  repetition  of  the  feats  of  the 
previous  decades.  The  pace  of  the  geometrical  progression  is 
too  killing  to  be  maintained ;  yet  all  present  indications  are 
that  the  close  of  the  decades  will  show  an  output  beyond  the 
dreams  even  of  five  years  ago.1 

This  enormous  increase,  however,  has  been  by  no  means 
evenly  distributed  over  the  United  States.  Within  the 
country  a  revolution  has  taken  place,  which  is  part  and  parcel 
of  the  changed  relation  to  other  countries,  and  which  must  be 
followed  before  the  latter  can  be  understood. 

The  first  great  impulse  to  the  production  of  crude  iron  on  a 
large  scale  came  in  the  United  States  with  the  successful  use 
of  anthracite  coal  as  fuel.  During  the  twenty  years  preced- 

1  The  figures  as  to  the  production  of  iron  in  the  two  countries  are  easily 
found  in  the  excellent  statistical  reports  prepared  for  the  trade  in  the  two 
countries,  —  the  Statistical  Reports  of  the  British  Iron  Trade  Association,  of  which 
Mr.  J.  S.  Jeans  has  long  been  secretary,  and  the  Statistical  Reports  of  the  Iron 
and  Steel  Association,  of  which  Mr.  J.  M.  Swank  has  been  the  equally  efficient 
secretary. 


570 


ECONOMIC  HISTORY. 


ing  the  Civil  War  (1840-60)  the  site  of  the  industry  and  its 
growth  were  governed  by  this  fuel.1  Hence  eastern  Pennsyl¬ 
vania  was  the  main  producing  district.  The  supplies  of  ore 
near  this  region  were  smelted  with  its  anthracite  coal,  and 
Philadelphia  was  the  central  market.  Proximity  to  the  sea¬ 
board  made  foreign  competition  easy,  except  so  far  as  it  was 
hampered  by  the  tariff  duties ;  and  the  very  existence  of  the 
iron  industry  was  felt  to  depend  on  the  maintenance  of  pro¬ 
tection.  For  some  time  after  the  close  of  the  Civil  War  this 
dominant  position  of  anthracite  iron  was  maintained.  In 
1872,  when  the  systematic  collection  of  detailed  statistics 
began,  out  of  a  total  production  of  2,500,000  tons,  one-half 
was  smelted  with  anthracite  coal,  a  third  with  bituminous 
coal  or  coke,  the  remainder  with  wood  (charcoal).  The  use 
of  soft  coal,  which  had  begun  before  1860,  became  rapidly 
greater.  Already  in  1872  it  was  important;  and  from  year 
to  year  it  grew.  In  the  periodic  oscillations  between  activity 
and  depression,  which  mark  the  iron  trade  more  distinctively 
than  any  other  industry,  anthracite  iron  shrank  sensitively  in 
the  slack  periods,  and  barely  regained  its  own  in  the  succeed¬ 
ing  periods  of  expansion.  Bituminous  or  coke  iron,  on  the 
other  hand,  held  its  own  during  the  hard  times,  and  advanced 
by  leaps  and  bounds  with  each  revival  of  activity.  In  1875 
for  the  first  time  its  output  exceeded  that  of  the  rival  eastern 
fuel,  and  since  that  date  the  huge  advance  in  the  iron  product 
of  the  United  States  has  been  dependent  on  the  use  of  coke. 
Indeed,  the  use  of  anthracite  alone  began  to  shrink  at  a  com¬ 
paratively  early  date.  It  soon  ceased  to  be  used  on  any  large 
scale  as  the  sole  fuel,  coke  being  mixed  with  it  for  use  in  the 
blast-furnace.  The  production  of  iron  with  anthracite  coal 
only  has  shrunk  to  insignificant  dimensions.  What  is  classed 
as  “  anthracite  iron”  is  smelted  with  a  mixture  of  coke  and 
hard  coal ;  and,  even  with  the  aid  of  the  coke,  this  means  of 
reducing  the  ore  has  come  to  be  of  less  and  less  importance. 
Virtually,  anthracite  coal  has  been  displaced  as  an  iron-making 
fuel. 

1  For  an  account  of  the  industry  during  this  period  I  refer  to  my  Tariff 
History  of  the  United  States,  pp.  123-135. 


THE  AMERICAN  IRON  INDUSTRY. 


571 


This  change  is  easy  of  explanation.  It  is  the  inevitable 
result  of  the  greater  plenty  and  effectiveness  of  coke ;  and  it 
has  been  powerfully  promoted  by  the  rapid  development  of  the 
United  States  west  of  the  Appalachian  chain,  and  the  near¬ 
ness  of  the  coke  region  to  this  growing  market.  Anthracite, 
at  best,  is  an  obdurate  fuel.  At  the  same  time  its  strictly 
limited  supply,  and  the  cleanliness  and  freedom  from  smoke 
which  make  it  an  ideal  domestic  fuel,  have  maintained  its  price 
at  a  comparatively  even  level.  On  the  other  hand,  the  almost 
unlimited  supplies  of  bituminous  coal  and  the  feverish  compe¬ 
tition  in  opening  coal  lands  and  marketing  their  product  have 
caused  an  almost  uninterrupted  fall  in  its  price.  Coke  has 
proved,  ton  for  ton,  a  better  fuel'  than  anthracite :  the  supplies 
of  bituminous  coal  available  for  coking  are  virtually  limitless ; 
and  the  processes  of  coking  have  been  applied  on  a  huge  scale 
and  with  tireless  energy. 

Pittsburg,  long  ago  seen  to  be  destined  to  become  a  great 
iron  centre  is  situated  in  the  heart  of  the  region  where 
coking  coal  is  plentiful.  To  this  point  the  iron  industry  has  con¬ 
verged,  attracted  first  by  cheap  fuel,  and  soon  by  other  geo¬ 
graphical  advantages  of  the  region,  —  its  easy  access  to  the 
growing  western  country,  and  the  added  opportunities  of 
securing  super-abundant  quantities  of  the  best  ore.  Pennsyl¬ 
vania  has  remained  the  greatest  iron-producing  State  in  the 
Union ;  but  since  1880  it  has  been  western  Pennsylvania,  and 
no  longer  eastern,  which  has  secured  to  the  State  its  leading 
position.  Since  1890  this  district  alone  has  yielded  steadily 
forty  per  cent,  of  the  enormous  iron  product  in  the  country ; 
and  it  is  here,  and  in  the  other  western  districts  in  which  the 
same  industrial  forces  have  been  at  work,  that  we  have  to 
study  the  conditions  on  which  the  growth  of  the  iron  industry 
has  depended. 

The  westward  movement  has  been  spoken  of  in  the  preced¬ 
ing  paragraph  as  affected  by  the  geographical  distribution  of 
the  fuel.  But  it  has  been  no  less  affected  by  the  distribution  of 
the  ore  supply  ;  and  the  effect  of  this  in  turn  has  rested  on  the 
revolution  wrought  in  the  iron  trade  by  the  Bessemer  process. 


572 


ECONOMIC  HISTORY. 


The  first  inventions  which  made  plentiful  the  iron  indis¬ 
pensable  for  all  our  material  civilization  were  Cort’s  processes 
for  puddling  and  rolling.  Through  the  first  three-quarters  of 
the  century  this  was  the  mode  in  which  the  world  got  its 
supply  of  the  metal  in  tough  form,  usable  where  heavy  strain 
must  come  on  it.  The  processes  involved  at  once  a  consider¬ 
able  plant,  complex  machinery,  and  strenuous  exertion  by 
skilled  and  powerful  laborers, — conditions  which  during  this 
period  promoted  the  supremacy  of  the  British  iron  trade.  In 
the  decade  1860-70  the  process  devised  by  Sir  Henry 
Bessemer,  to  which  his  name  attaches,  began  a  second  revolu¬ 
tion  in  the  iron  trade.  That  process  involves  a  still  larger 
plant  and  still  more  elaborate  machinery;  and  it  applies 
machinery  more  fully  to  the  elimination  and  subsequent 
replacing  of  the  carbon  on  which  the  toughness  of  the  iron 
depends.  By  the  new  methods  the  production  of  mild  steel  — 
that  is,  tough  iron  —  became  possible  on  a  vastly  greater 
scale.  Bessemer  steel  has  displaced  puddled  iron  in  most  of 
its  uses.  Not  only  this :  the  cheap  and  abundant  supply, 
besides  filling  needs  previously  existing,  has  opened  vistas  for 
new  plant,  machinery,  durable  instruments  of  production  of 
all  sorts.  The  first  great  application  of  the  method  was  to 
rails,  where  the  elastic  and  impact-sustaining  steel  enabled 
railway  engines  and  cars  to  be  doubled  and  quadrupled 
in  size,  and  to  become  more  efficient  in  even  greater  ratio. 
Gradually  and  steadily,  new  and  wider  uses  were  found  for 
the  cheap  steel.  From  great  ships  down  to  every-day  nails, 
almost  every  iron  instrument  became  cheaper  and  better. 
Wood  was  supplanted  by  steel  for  a  variety  of  uses,  and  the 
slow-growing  and  easily  exhausted  stores  of  timber  were  re¬ 
enforced  by  the  well-nigh  limitless  deposits  of  ore  in  the 
earth’s  crust.  A  new  domain  in  nature’s  forces  was  opened  to 
man. 

But  the  Bessemer  process  depends  for  its  availability  on 
special  kinds  of  ore  and  pig  iron,  —  such  as  are  well-nigh  free 
from  sulphur  and  especially  from  phosphorus.  Variants  of 
the  process,  free  from  this  limitation,  have  indeed  been 
applied  on  a  great  scale,  especially  in  Germany,  where 


THE  AMERICAN  IRON  INDUSTRY . 


573 


supplies  of  non-phosphoric  ore  are  not  readily  available. 
But  the  original  Bessemer  process  remains  the  most  effective 
and  the  most  economical.  Ores  adapted  to  it  have  hence  be¬ 
come  doubly  valuable,  and  the  accessible  parts  of  the  earth 
have  been  scoured  to  find  them.  The  deposits  of  Great 
Britain  in  Cumberland  and  Lancashire  contained  important 
supplies,  yet  not  in  quantity  adequate  to  the  new  demand : 
and  the  Spanish  fields  of  Bilboa,  on  the  Bay  of  Biscay,  have 
become  an  indispensable  supplement  for  the  British  iron¬ 
masters.  In  the  United  States,  also,  some  of  the  sources 
previously  used  in  the  region  east  of  the  Appalachian  chain 
proved  to  be  available,  —  such  as  the  famed  deposits,  once 
unique  in  their  ease  of  working,  in  the  Cornwall  hills  of 
eastern  Pennsylvania.  But  the  greater  part  of  the  eastern 
ores  were  too  highly  charged  with  phosphorus,  or  for  other 
reasons  unavailable.  Here,  as  in  Great  Britain,  a  distant 
source  of  supply  was  turned  to.  The  Lake  Superior  iron 
region,  long  known  to  explorers  and  geologists,  suddenly 
sprang  into  commanding  place.  Here  were  abundant  and 
super-abundant  supplies  of  rich  and  properly  constituted  ore. 
These  and  the  equally  abundant  coal  of  Pennsylvania  were 
brought  together,  the  iron  made  from  them  was  converted 
into  steel  by  the  Bessemer  process  ;  and  thus  only  became 
possible  the  astounding  growth  in  the  production  of  iron  and 
steel  in  the  United  States. 

The  iron  mines  of  the  Lake  Superior  region  stretch  in 
widely  separated  fields  along  the  lake,  jrom  the  middle  of  its 
southern  shore  to  its  extreme  north-western  end.  Intercalated 
between  them  is  the  great  copper-bearing  peninsula,  whose 
rich  yield  of  that  metal  has  affected  the  copper  trade  in  the 
same  manner  and  almost  in  the  same  degree  as  the  iron 
mines  have  the  iron  trade.  At  the  extreme  eastern  end  is  the 
Menominee  iron  field,  usually  described  in  connection  with 
the  other  Lake  Superior  fields,  yet  differing  from  them  in 
important  respects.  The  ore  of  the  Menominee  district  is 
easily  mined  ;  and  it  is  easily  shipped,  finding  an  outlet  by  the 
port  of  Escanaba  on  Lake  Michigan,  and  thus  traversing  a 
much  shorter  journey  to  its  Eastern  markets  than  that  from 


574 


ECONOMIC  HISTORY. 


the  Lake  Superior  mines  proper.  But  it  is  usually  of  non- 
Bessemer  quality,  and  hence  can  play  no  considerable  part  in 
the  most  characteristic  effects  of  the  new  developments.  The 
great  Bessemer  ore  fields  of  Lake  Superior  are  four  in 
number :  in  geographical  order  from  east  to  west,  the  Mar¬ 
quette,  the  Gogebic,  and  the  neighboring  Vermilion  and 
Mesabi.  As  it  happens,  the  geographical  order  has  been  also, 
in  the  main,  the  order  of  exploitation.  The  easternmost,  the 
Marquette,  finding  its  outlet  by  the  port  of  that  name,  was  the 
first  to  be  worked  on  a  great  scale.  Even  before  the  Civil 
War,  mining  and  smelting  had  begun ;  and,  as  the  Bessemer 
process  was  more  and  more  largely  used,  especially  after  1878, 
it  was  exploited  on  a  larger  and  larger  scale.  Here  began 
the  digging  on  a  great  scale,  and  the  transportation  to  great 
distance,  of  Bessemer  ore.  After  a  considerable  interval  the 
second  field,  the  Gogebic,  began  to  be  worked,  in  1884. 
Lying  some  two  'hundred  miles  further  west,  along  the 
boundary  line  between  Wisconsin  and  Michigan,  and  finding 
its  outlet  by  Ashland,  on  the  southern  shore  of  Lake  Superior, 
here  was  found  perhaps  the  richest  and  purest  Bessemer  ore. 
At  about  the  same  time,  in  1884,  began  the  development 
of  the  most  distant  of  the  fields,  the  Vermilion,  lying  to  the 
north  of  the  extreme  end  of  Lake  Superior,  in  the  State  of 
Minnesota,  close  to  the  Canada  frontier.  Here,  too,  were 
great  stores  of  rich  Bessemer  ore,  shipped  by  the  port  of 
Two  Harbors,  on  the  northern  shore  of  the  lake. 

In  all  these  fields  the  ore  has  been  secured  by  what  we 
commonly  think  of  as  “  mining,”  —  by  digging  into  the 
bowels  of  the  earth,  and  bringing  the  material  up  from  a 
greater  or  less  depth.  But  in  very  recent  years  the  latest 
and  now  the  most  important  of  the  fields  has  given  oppor¬ 
tunity  for  the  simplest  and  cheapest  form  of  mining:  great 
bodies  of  ore  are  lying  close  under  the  ground,  and,  when 
once  the  surface  glacial  drift  has  been  removed,  obtainable 
by  simple  digging  and  shovelling,  as  from  a  clay  pit.1  Along 

1  It  should  be  noted  that  in  the  Marquette  region,  also,  the  iron  ore  was 
secured  at  the  first  working  and  for  many  years  thereafter  by  open  cuts.  But  the 
extraction  of  ore  on  a  great  scale  has  proceeded  by  underground  operations. 


THE  AMERICAN  IRON  INDUSTRY- 


515 


the  Mesabi1  range  of  hills,  lying  about  one  hundred  miles 
north-west  of  the  end  of  Lake  Superior,  distant  not  many 
miles  from  the  Yermilion  range,  vast  tracts  of  rich  iron  ore, 
finely  comminuted  and  easily  worked,  lie  close  to  the  surface. 
Here  a  new  source  of  supply  was  added,  offering  unique  op¬ 
portunities  for  exploitation  on  a  great  scale.  These  oppor¬ 
tunities  were  availed  of  with  astounding  quickness.  The 
Mesabi  field  at  once  sprang  into  the  front  rank  among  the 
Lake  Superior  fields,  and,  indeed,  among  all  the  iron-ore 
fields  of  the  world.  Ten  years  ago  the  region  was  a  trackless 
waste.  In  1892  it  was  opened  by  railway.  Towns  sprang 
up,  huge  steam-shovels  attacked  the  precious  ore,  and  long 
trains  carried  it  to  the  newly  constructed  docks  at  the. port 
of  Duluth.  Even  during  the  depression  that  followed  the 
crisis  of  1893  the  output  from  this  field  mounted  year  by 
year.  In  1893,  virtually  the  first  year  of  operation,  600,000 
tons  were  shipped  from  it;  in  1894,  thrice  that  amount;  and 
in  1895  it  became,  what  it  has  since  remained,  the  most  pro¬ 
ductive  of  the  iron-mining  districts.  A  little  less  than  half 
of  the  ore  is  of  Bessemer  grade.  Its  physical  constitution, 
moreover,  is  such  that,  for  advantageous  use  in  the  furnace, 
other  ore  needs  to  be  mixed  with  it.  Were  it  all  of  the  prized 
Bessemer  quality,  and  in  the  best  form,  the  other  fields  might 
be  entirely  displaced.  With  the  limitations  in  the  quality  of 
the  new  ore,  the  other  fields  still  find  themselves  able  to  hold 
their  own  in  the  market,  though  their  supremacy  is  ended  by 
the  favored  rival. 

For  many  years  the  Lake  Superior  mines  have  been  the 
main  sources  of  supply  for  the  iron  ore  of  the  American  iron 
industry.  More  than  half  of  the  total  supply  has  here  been 
secured;  and  the  Bessemer  supply,  which  has  been  by  far 
the  most  effective  and  significant  part  of  the  total,  has  come 
mainly  from  this  region.2 

1  Variously  spelled :  Mesabi,  Mesaba,  Messabi,  Messaba. 

2  The  United  States  Geological  Survey,  in  its  successive  admirable  Reports  on 
the  Mineral  Resources  of  the  United  States,  has  followed  the  history  of  the  iron 
fields  of  Lake  Superior,  as,  indeed,  of  all  the  mineral  resources  of  the  country. 
In  the  issue  for  1895-96  (forming  vol.  iii.  of  the  Seventeenth  Annual  Report  of  the 
Survey)  a  summary  description  is  given,  with  convenient  sketch  maps  showing 


576 


ECONOMIC  HISTORY . 


In  this  brief  description  of  the  Lake  Superior  iron  region, 
reference  has  been  made  to  the  ports  by  which  the  ore  is 
shipped,  —  Escanaba,  Marquette,  Ashland,  Duluth,  Two  Har¬ 
bors.  To  each  of  these  the  ore  must  be  carried  by  rail  from 
the  mines,  —  sometimes  a  few  miles,  sometimes,  as  with  a 
large  part  of  the  Minnesota  supplies,  a  hundred  and  more. 
And,  with  this  first  movement,  only  the  beginning  is  made  in 
its  long  journey.  From  the  shipping  port  it  is  carried  east¬ 
ward  by  water  to  meet  the  coal,  —  the  coal  being  coked  at  the 
mines,  and  in  that  form  made  best  available  for  smelting  pur¬ 
poses.  Some  of  the  ore  goes  down  Lake  Michigan  to  Chicago, 
where  it  meets  the  coal  from  Pennsylvania  about  half-way. 
Some  of  it  goes  farther,  through  Lakes  Huron  and  Erie,  and 
meets  the  coal  at  Toledo,  Ashtabula,  Cleveland,  and  other 
ports  on  Lake  Erie.  The  largest  part  is  unloaded  from  the 
vessels  at  lake  ports,  and  carried  by  rail  to  the  heart  of  the 
Pittsburg  coal  district,  there  to  be  smelted  by  the  coal  on  its 
own  ground.  No  small  amount  goes  even  beyond, — to  the 
eastward  in  Pennsylvania,  beyond  the  Pittsburg  district,  even 
into  New  Jersey  and  New  York,  almost  to  the  seaboard  itself. 
Hence  the  cities  of  Erie  and  Buffalo  have  become  important 
ore-receiving  ports  on  Lake  Erie,  the  ore,  if  not  smelted  there, 
going  thence  by  rail  on  its  journey  to  the  smelter.  This  last 
and  farthest  invasion  of  distant  regions  by  the  Lake  Superior 
ore  has  been  promoted  by  the  import  duty  on  the  competing 
foreign  ore  which  seeks  to  find  an  entrance  by  the  Atlantic 
seaboard,  —  an  aspect  of  the  iron  trade  of  which  more  will  be 
said  in  the  second  part  of  this  paper.1 

The  iron-producing  region  which  depends  on  the  Lake 
Superior  ores  thus  stretches  over  a  wide  district,  the  ex¬ 
treme  ends  being  separated  more  than  a  thousand  miles. 
Close  by  the  iron  mines  are  a  number  of  charcoal-using  fur¬ 
naces  in  Wisconsin  and  Michigan.  The  still  unexhausted 
forests  of  these  States  supply  this  fuel  in  abundance ;  and 


the  location  of  the  several  fields.  In  Cassier’s  Magazine  for  October,  1899, 
Messrs.  J.  and  A.  P.  Head,  two  English  engineers,  published  an  excellent  brief 
account  of  the  Lake  Superior  mines,  and  of  the  modes  of  working  them. 

1  The  Quarterly  Journal  of  Economics ,  Aug.  1900,  pp.  475-508. 


4 


THE  AMERICAN  IRON  INDUSTRY.  577 

charcoal  iron,  though  long  supplanted  for  most  uses  by  the 
coke-smelted  rival,  has  qualities  which  enable  a  limited  sup¬ 
ply  to  find  a  market,  even  at  a  relatively  high  price.  Next  in 
order  come  Chicago  (South  Chicago)  and  some  neighboring 
cities,  among  which  Milwaukee  in  Wisconsin  and  Joliet  in 
Illinois  are  the  most  notable.  It  is  one  of  the  surprises  of 
American  industry  that  iron  manufacturing  on  a  huge  scale 
should  be  undertaken  at  such  points,  distant  alike  from  ore 
and  from  coal,  and  having  no  natural  advantages  whatever. 
The  coke  is  moved  hundreds  of  miles  by  rail  from  Pennsyl¬ 
vania,  and  meets  the  ore  which  has  travelled  no  less  a  dis¬ 
tance  from  Lake  Superior.  Ease  of  access  to  the  western 
market  gives  these  sites  an  advantage,  or  at  least  goes  to 
offset  the  disadvantage  of  the  longer  railway  haul  of  the  fuel. 
Other  iron-producing  points  of  the  same  sort  are  scattered 
along  Lake  Erie.  At  each  of  the  ports  of  Toledo,  Lorain, 
Ashtabula,  Erie,  Buffalo,  especially  Cleveland,  ore  is  smelted, 
and  iron  and  steel  making  is  carried  on.  But  the  coal  region 
itself  —  western  Pennsylvania  and  the  adjacent  parts  of  Ohio 
—  remain  the  heart  and  centre  of  the  iron  industry.  Hither 
most  of  the  ore  is  carried ;  and  here  the  operations  of  smelt¬ 
ing,  converting  into  steel,  fashioning  the  steel  into  rails, 
bridges,  plates,  wire,  nails,  structural  forms  for  building,  are 
performed  on  the  greatest  scale.  For  some  years  the  natural 
gas  of  this  region  added  to  its  advantages  and  aided  in  its  ex¬ 
ceptionally  rapid  growth.  But  each  supply  of  gas  exhausted 
itself  before  long,  and  new  discoveries  did  not  maintain  the 
inflowing  volume  at  its  first  level.  It  was  the  abundant  and 
excellent  coal  which  formed  the  sure  basis  of  the  manufactur¬ 
ing  industries,  and  the  permanent  foundation  more  especially 
of  iron  and  steel  making. 

Whether  the  ore  goes  to  the  coal  or  the  coal  meets  the  ore 
half-way,  one  or  both  must  travel  a  long  journey,  by  land  as 
well  as  by  water.  One  or  both  must  be  laden  and  unladen 
several  times.  A  carriage  of  800,  900,  over  1,000  miles 
must  be  achieved,  with  two  separate  hauls  by  rail.  Fifty 
years  ago,  even  twenty  years  ago,  it  would  have  seemed  well- 
nigh  impossible  to  accomplish  this  on  a  great  scale  and  with 

37 


573 


ECONOMIC  HISTORY. 


great  cheapness.  The  geographical  conditions  on  which  a 
large  iron  industry  must  rest  were  supposed  by  Jevons  in 
1866  to  be  the  contiguity  of  iron  and  coal.1  But  here  are 
supplies  of  the  two  minerals  separated  by  a  thousand  miles  of 
land  and  water,  and  combined  for  iron- making  on  the  largest 
scale  known  in  the  world’s  history.  One  of  the  most  sagacious 
of  American  students  of  economics,  Albert  Gallatin,  early 
predicted  that  the  coal  area  of  western  Pennsylvania  would 
become  the  foundation  of  a  great  iron  industry,  and  that  only 
with  its  development  would  the  American  iron  manufacture 
attain  a  large  independent  growth.2  But  he  could  not  dream 
that  his  prophecy  would  be  fulfilled  by  the  utilization  of  ores 
distant  fifteen  hundred  miles  from  the  seaboard,  transported 
from  a  region  which  was  in  his  day,  and  remained  for  half  a 
century  after  his  day,  an  unexplored  wilderness. 

The  history  of  the  American  iron  trade  in  the  last  thirty 
years  is  thus  in  no  small  part  a  history  of  transportation. 
The  cheap  carriage  of  the  ore  and  coal  has  been  the  indis¬ 
pensable  condition  of  the  smelting  of  the  one  by  the  other. 
And,  clearly,  this  factor  has  not  been  peculiar  to  the  iron 
industry.  The  perfecting  of  transportation  has  been  almost 
the  most  remarkable  of  the  mechanical  triumphs  of  the  United 
States.  Great  as  have  been  the  evils  of  our  railway  methods, 
disheartening  as  have  been  some  of  the  results  of  unfettered 
competition,  the  efficiency  of  the  railways  has  been  brought 
to  a  point  not  approached  elsewhere,  largely  in  consequence 
of  that  very  competition  whose  ill  effects  have  been  so  often 
and  so  justly  dwelt  on.  The  good  has  come  with  the  evil ; 
and  here,  as  in  the  whole  domain  of  private  property  and  com¬ 
petitive  industry,  the  crucial  problem  is  how  to  eradicate  the 
ill  and  yet  maintain  the  good.  In  the  carriage  of  iron  ore 
and  of  coal,  the  methods  of  railway  transportation  developed 
under  the  stress  of  eager  competition  have  been  utilized  to 
the  utmost ;  and  the  same  is  true  of  the  transfer  from  rail  to 
ship  and  from  ship  to  rail  again,  of  the  carriage  in  the  ship 

1  Jevons,  The  Coal  Question,  second  edition,  chap.  xv. 

2  Albert  Gallatin,  Memorial  to  the  Free  Trade  Convention  (1832),  as  reprinted 
in  State  Papers  and  Speeches  on  the  Tariff,  pp.  19,  180. 


THE  AMERICAN  IRON  INDUSTRY. 


579 


itself,  and  of  the  handling  of  accumulated  piles  of  the  two 
materials.  The  ore  is  loaded  to  cars  at  the  mines  by  me¬ 
chanical  appliances.  At  the  Mesabi  mines  the  very  steam- 
shovel  that  digs  the  ore  from  the  ground  deposits  it  in  the 
adjacent  car.  At  the  lake,  high  ore-docks  protrude  hundreds 
of  yards  into  the  water.  On  top  of  them  run  the  trains,  the 
ore  dropping  by  gravity  from  openings  in  the  car-bottoms 
into  the  pockets  of  the  docks.  Thence  it  drops  again  through 
long  ducts  into  the  waiting  vessels,  ranged  below  alongside 
the  dock.  At  every  step  direct  manual  labor  is  avoided,  and 
machines  and  machine-like  devices  enable  huge  quantities  of 
ore  to  be  moved  at  a  cost  astonishingly  low.  The  vessels 
themselves,  constructed  for  the  service,  carry  the  maximum 
of  cargo  for  the  minimum  of  expense  ;  while  the  machinery 
for  rapid  loading  and  unloading  reduces  to  the  shortest  the 
non-earning  time  of  lying  at  the  docks.  At  the  other  end  of 
the  water  carriage,  especially  on  Lake  Erie,  similar  highly 
developed  mechanical  appliances  transfer  from  boat  to  rail¬ 
way  car  again,  or,  at  will,  to  the  piles  where  stocks  are  accu¬ 
mulated  for  the  winter  months  of  closed  navigation.  At  either 
end  the  railway  has  been  raised  to  the  maximum  of  efficiency 
for  the  rapid  and  economical  carriage  of  bulky  freight.  What 
has  been  done  for  grain,  for  cotton,  for  coal,  for  all  the  great 
staples,  has  been  done  here  also,  and  here  perhaps  more 
effectively  than  anywhere  else :  the  plant  has  been  made 
larger  and  stronger,  the  paying  weight  increased  in  proportion 
to  the  dead  weight,  the  ton-mile  expense  lessened  by  heavier 
rails,  larger  engines,  longer  trains,  and  easier  grades,  the 
mechanism  for  loading,  unloading,  transshipping  perfected  to 
the  last  degree,  or  to  what  seems  the  last  degree  until  yet 
another  stage  towards  perfection  is  invented.  And  evidently 
here,  as  elsewhere,  the  process  has  been  powerfully  promoted 
by  unhampered  trade  over  a  vast  territory,  and  the  conse¬ 
quent  certainty  that  costly  apparatus  for  lengthened  transpor¬ 
tation  will  never  be  shorn  of  its  effectiveness  by  a  restriction 
in  the  distant  market. 

Still  another  factor  has  been  at  work  in  the  iron  trade,  as  it 
has  in  other  great  industries,  —  the  march  of  production  to  a 


580 


ECONOMIC  HISTORY. 


greater  and  greater  scale,  and  the  combination  of  connected 
industries  into  great  single-managed  systems.  Nothing  is 
more  wonderful  in  the  industrial  history  of  the  past  genera¬ 
tion  than  the  new  vista  opened  as  to  the  possibilities  of  organ¬ 
ization.  The  splitting  up  among  different  individuals  and 
separate  establishments  of  the  successive  steps  in  a  com¬ 
plicated  industry  —  those  of  the  mining,  carrying,  smelting, 
rolling,  fashioning  of  iron  —  was  supposed  to  be  due  to  the 
limitations  of  human  brain  and  energy :  the  management  of 
them  all  was  beyond  the  physical  and  nervous  capacity  of 
any  one  man  or  of  any  small  group  of  associates.  But  the 
range  of  single  management,  the  size  of  the  unit,  have  en¬ 
larged  prodigiously.  The  increasing  application  of  machinery 
has  made  it  possible  to  reduce  operations  more  and  more  to 
routine  and  system,  and  to  lessen  the  need  of  independent 
judgment  for  every  step.  Technological  education  has  sup¬ 
plied  an  array  of  trained,  intelligent,  and  trustworthy  assist¬ 
ants, —  engineers,  chemists,  mineralogists,  electricians,  —  to 
whom  can  be  delegated  a  multitude  of  steps  and  processes 
that  formerly  needed  the  watchful  eye  of  the  master  himself. 
That  master  must  possess  new  powers  and  new  resources ; 
and  the  freedom  of  the  modern  industrial  community,  and 
especially  the  free  atmosphere  of  our  restless  and  reckless 
democracy,  have  stimulated  and  drawn  forth  the  masterful 
minds  from  every  social  stratum.  Hence  in  all  directions  we 
see  combinations  which  unite  in  one  whole  a  number  of  asso¬ 
ciated  industries,  and,  at  their  best,  secure  the  highest  indus¬ 
trial  efficiency.  At  their  best;  for  only  then  are  the  gains 
permanently  secured.  The  retribution  for  error  in  manage¬ 
ment  is  as  great  as  are  the  rewards  of  success  ;  and  judgment 
has  become  the  most  highly  prized  and  highly  paid  human 
talent. 

The  iron  trade  has  shown  as  markedly  as  any  of  the  great 
industries  the  signs  and  effects  of  these  new  conditions.  Not 
only  has  the  size  of  individual  establishments  grown,  —  this 
is  a  phenomenon  of  long  standing,  —  but  the  number  of  in¬ 
dustries  united  in  one  organization  has  rapidly  enlarged. 
Iron  mines,  coal  mines,  coke  ovens,  railways,  steamers,  docks, 


THE  AMERICAN  IRON  INDUSTRY. 


581 


smelting  works,  converting  works,  rolling-mills,  steel-works, 
machine-shops, — these  have  been  combined  into  one  impos¬ 
ing  complex.  The  great  iron  and  steel  companies  operate 
iron  mines  on  Lake  Superior,  coal  mines  and  coke  establish¬ 
ments  in  Pennsylvania,  docks  and  railways,  as  well  as  iron 
and  steel  works  proper.  The  largest  of  them,  the  Carnegie 
Company,  has  built  a  railway  of  its  own,  specially  equipped 
for  the  massive  and  cheap  carriage  of  ore  and  fuel,  from  the 
shore  of  Lake  Erie  to  the  Pittsburg  coal  district.  At  its  ter¬ 
minus  on  Lake  Erie  (Conneaut)  a  new  harbor  and  a  new  city 
have  been  created.  The  economy  in  production  from  such 
widely  ramifying  organizations  is  not  merely  or  chiefly  in  dis¬ 
pensing  with  the  services  and  saving  the  gains  of  so  many 
independent  middlemen  :  it  arises  mainly  from  consistent 
planning  of  every  stage,  the  nice  intercalation  of  operations, 
the  sweeping  introduction  from  end  to  end  of  expensive 
and  rapid-working  machinery,  continuously  supplied  under 
homogeneous  administration  with  the  huge  quantities  of 
material  which  alone  make  possible  effective  and  economical 
utilization  of  the  great  plant.1 


1  Among  the  great  iron  and  steel  enterprises  may  be  noted  the  following  :  — 

The  Carnegie  Company,  in  form  an  unincorporated  partnership,  having  no 
shares  listed  on  exchanges  or  publicly  dealt  in,  has  grown  from  comparatively 
small  beginnings  to  huge  dimensions,  its  capitalization  being  supposed  to  be 
$200,000,000.  It  owns  or  controls  the  most  productive  mines  of  the  Gogebic  and 
Mesabi  regions,  part  of  the  mines  in  the  Vermilion  range,  and  mines  also  in  the 
Marquette  range.  Railways,  docks,  and  a  fleet  of  steamers  on  the  lakes  are 
under  its  control.  Its  railway  from  Lake  Erie  at  Conneaut  to  Pittsburg,  equipped 
in  the  most  solid  manner  for  transporting  ore,  fuel,  and  iron,  carries  freight  at 
rates  which  are  in  the  lowest  range  of  rates  per  ton-mile  among  American  rail¬ 
ways.  Its  iron  and  steel  works  are  at  various  points  centering  about  Pittsburg. 
It  owns  the  greater  part  of  the  coal  lands  and  coke  plants  in  the  Connellsville 
district. 

The  Federal  Steel  Company,  a  New  Jersey  corporation,  with  a  capital  of 
$200,000,000,  half  preferred,  half  common,  is  the  greatest  rival  of  the  Carnegie 
Company  on  Lake  Superior.  It  owns  mines  in  the  Mesabi  range  and  in  the 
Vermilion  range,  with  a  railway  of  its  own  leading  to  both.  It  has  also  a  fleet 
of  steamers  on  the  lakes,  the  great  works  of  the  Illinois  Steel  Company  (of  which 
mainly  it  is  the  successor)  at  Chicago,  Milwaukee,  and  Joliet,  a  considerable 
railway  of  its  own  about  Chicago,  works  at  Lorain,  Ohio  (on  Lake  Erie),  and  at 
Johnstown,  Pa. 

The  American  Steel  and  Wire  Company,  also  a  New  Jersey  corporation,  with 


582 


ECONOMIC  HISTORY. 


It  is  not  within  the  scope  of  the  present  paper  to  weigh  the 
advantages  or  disadvantages  of  this  mode  of  organizing  in¬ 
dustry.  It  may  bring  the  community  face  to  face  with  the 
conditions  of  established  monopoly,  or,  more  probably,  in  this 
industry  at  least,  may  mean  simply  a  farther  stage  in  the  de¬ 
velopment  of  great-scale  production.  It  may  prove,  in  the 
combinations  of  the  last  year  or  two,  to  have  been  carried  so 
far  as  to  transcend  the  bounds  of  human  capacity,  and  may 
therefore  portend  a  series  of  break-downs,  and  the  subsequent 
sub-division  and  reseparation  of  the  component  industries. 
Whether  in  its  social  aspects  or  in  its  prospects  of  permanent 
productive  efficiency,  we  must  await  further  experience  before 
knowing  what  gains  and  losses  will  accrue,  what  problems  must 
be  faced.  But  it  is  clear  that  great  organizations  of  the  pro¬ 
ductive  forces  —  even  though  perhaps  not  so  huge  as  some  of 
those  launched  of  late  years — are  to  be  permanent  factors  in 
the  conduct  of  many  industries,  and  of  the  iron  industry 
among  them.  And  it  is  clear,  also,  that  the  movement  is  not 
peculiar  to  the  iron  trade,  and  points  to  no  forces  specially 
aroused  in  the  protected  industries.  Whether  in  the  cheapen¬ 
ing  of  transportation,  in  the  advance  of  the  technical  arts,  in 
the  organization  and  management  of  great  consolidations,  the 
forces  have  been  such  as  directed  American  manufacturing 
and  mechanical  industry  at  large,  and  indeed  have  been  at 


a  capital  of  $90,000,000,  owns  mines  in  the  Marquette  and  Mesabi  regions,  coal 
lands  and  coke  ovens,  iron  and  steel  works  at  Cleveland  and  Pittsburg,  and  a 
large  number  of  rod  and  wire  mills  scattered  over  the  country  from  Massachusetts 
to  Missouri. 

Other  very  large  enterprises  are  the  Republic  Iron  and  Steel  Company  (capi¬ 
tal,  $55,000,000)  and  the  National  Steel  Company,  capital  about  $60,000,000), 
both  with  widely  ramifying  operations.  More  concentrated  in  their  operations 
but  still  on  a  great  scale,  are  the  Bethlehem  Steel,  the  Cambria  Steel,  the  Penn¬ 
sylvania  Steel,  and  the  Lackawana  Iron  and  Steel  Companies. 

Of  a  different  type  are  certain  corporations  to  which  the  term  “trust  ”  more 
specially  applies,  attempting  as  they  do  to  control  the  entire  production  of  cer¬ 
tain  articles.  Among  these  are  the  Americau  Tin  Plate,  the  American  Steel 
Hoop,  the  National  Tube  Companies. 

[Most  of  the  corporations  above  enumerated  were  combined  in  the  United 
States  Steel  Corporation,  on  February  25,  1901.  Cf.  C.  F.  Meade’s  “The 
Amalgamated  Association,  in  The  Quarterly  Journal  of  Economics,  November, 
1901,  pp.  60-68.] 


THE  AMERICAN  IRON  INDUSTRY.  583 

i  *  . 

work  in  greater  or  less  degree  in  all  the  countries  of  advanced 
civilization. 

While  the  Lake  Superior  ores,  utilized  under  the  conditions 
just  described,  have  been  by  far  the  most  important  source  of 
supply  for  the  iron  industry,  a  large  contribution  has  come 
from  another  source,  also,  —  from  the  Southern  States. 

In  the  region  where  the  States  of  Tennessee,  Alabama,  and 
Georgia  adjoin,  the  conditions  once  thought  indispensable  for 
a  flourishing  iron  industry  exist  in  perfection.  Here  are  great 
deposits  of  ore,  easy  of  working ;  and  close  by  them  great  de¬ 
posits  of  coking  coal,  no  less  easily  worked.  Before  the  Civil 
War,  these  natural  advantages  were  not  utilized  :  the  regime 
of  slavery  and  the  lack  of  means  of  transportation  prevented 
any  resort  to  them.  But  with  the  quickening  of  the  industrial 
life  of  the  South,  when  once  the  Civil  War  and  the  trying 
days  of  reconstruction  were  passed,  the  mineral  resources  of 
this  region  were  developed  on  a  rapidly  enlarging  scale. 
Alabama,  where  the  best  deposits  of  coal  occur,  became  a 
great  iron-producing  State :  here  again,  though  for  a  less  dis¬ 
tance  and  on  a  smaller  scale,  the  ore  made  its  journey  to  the 
coal.  The  rate  of  growth  was  most  rapid  between  1880  and 
1890 :  the  pig-iron  output  of  Alabama  rose  from  69,000  tons 
in  1880  to  915,000  in  1890.  The  large  supply  of  labor  at  low 
wages  has  contributed  to  the  easy  and  profitable  utilization 
of  this  source  of  supply.  The  free  negro  has  turned  miner, 
and  has  proved  not  only  a  docile  laborer,  but  also,  —  paid,  as 
miners  are,  according  to  the  tonnage  brought  to  the  pit’s 
mouth,  • —  on  the  whole,  an  efficient  one.  It  may  be  a  ques¬ 
tion  how  far  the  low-money  wages  paid  to  him  are  low  simply 
in  proportion  to  his  still  moderate  efficiency,  and  how  far  they 
constitute  a  factor  of  real  importance  in  enabling  the  product 
to  be  put  on  the  market  at  a  low  price.  The  favorable  natu¬ 
ral  conditions,  when  once  unlocked  by  the  regime  of  freedom 
and  the  means  of  transportation  that  came  with  it,  doubtless 
constitute  the  main  basis  for  the  growth  of  the  Alabama  iron 
industry.  There  are  other  aspects  of  it  which  deserve  the 
attentive  consideration  of  the  student  of  social  questions,  — 


584 


ECONOMIC  HISTORY. 


the  conduct  and  the  prospects  of  the  negroes  suddenly  herded 
together  in  the  mining  regions,  and  the  relations  of  the  two 
races  under  the  new  conditions.  But  these  are  matters  that 
lie  apart  from  the  present  inquiry.  For  good  or  ill  —  doubt¬ 
less,  mainly  for  good  —  the  Southern  iron  has  taken  its  place 
as  an  important  part  of  the  iron  supply,  with  the  same  rapid¬ 
ity,  though  with  no  such  dramatic  features,  as  that  smelted  in 
Pennsylvania  from  the  Lake  Superior  ores. 

The  Southern  ore  contains  phosphorus  in  too  large  amounts 
to  make  it  available  for  the  Bessemer  process ;  and  this  has 
given  it  a  place  somewhat  apart  in  the  iron  industry  of  the 
country.  The  iron  made  from  it  has  not  competed  with  that 
from  the  Lake  Superior  ore,  and  has  been  used  chiefly  for 
general  foundry  purposes.  Marketed  at  a  very  low  price,  the 
increasing  supplies  have  made  their  way  to  places  further  and 
further  removed.  Pittsburg  itself  soon  used  Alabama  iron  for 
foundry  purposes ;  the  Western  States  and  the  Eastern  alike 
were  supplied  ;  in  New  England  it  displaced  Scotch  pig,  pre¬ 
viously  imported  in  considerable  quantity ;  and,  finally,  it 
began  to  be  exported  to  England  itself.  These  exports  are 
probably  not  of  importance  in  the  permanent  current  of  trade  : 
the  iron  has  gone  out  chiefly  in  a  period  of  unusually  depressed 
prices,  and  even  at  this  time  only  as  ballast  for  cotton  ships. 
Beyond  this  strictly  limited  movement  we  shall  probably  see 
the  export  of  iron  from  the  United  States,  not  in  its  crude 
form,  but  in  much  more  advanced  stages.  But  this  is  a  sub¬ 
ject  for  later  consideration.  It  suffices  to  note  here  that  the 
possibility  of  export,  even  at  nominal  rates  of  freight  and  in 
times  of  exceptionally  low  prices,  shows  how  vastly  changed 
are  the  conditions  from  those  of  thirty  years  ago. 

The  outcome  of  the  great  changes  in  the  geographical  dis¬ 
tribution  of  the  iron  industry  is  shown  in  the  tabular  state¬ 
ment  on  the  next  page. 

In  the  Eastern  District  the  output,  notwithstanding  a  great 
increase  in  the  period  for  which  the  year  1890  stands,  has 

barely  held  its  own.  The  total  production  in  1895-98  was 

% 

not  sensibly  greater  than  in  1872.  On  the  other  hand,  the 
Central  District  has  increased  its  production  steadily  and 


THE  AMERICAN  IRON  INDUSTRY. 


585 


enormously,  whether  in  western  Pennsylvania  itself  or  in  the 
neighboring  States  of  Ohio,  Indiana,  Illinois.  This  is  the 
region  where  Lake  Superior  ore  is  smelted  with  Pittsburg 
coal :  in  and  about  Pittsburg  itself,  in  the  immediately  adja¬ 
cent  parts  of  Ohio,  and  at  the  various  lake  cities  where  the 

PRODUCTION  OF  PIG  IRON  IN  THE  UNITED  STATES.1 


(In  thousands  of  gross  tons.) 


1872. 

1880. 

1885. 

1890. 

1895. 

1898. 

Eastern  District  (eastern  Penn¬ 
sylvania,  New  York,  New 
Jersey) . 

1,217 

1,610 

1,312 

2,342 

1,390 

1,431 

Western  Pennsylvania  alone  . 

387 

772 

1,081 

2,661 

3,549 

4,435 

Central  District  (western  Penn¬ 
sylvania  and  also  Ohio,  In¬ 
diana,  Illinois) . 

849 

1,502 

1,874 

4,517 

6,019 

7,787 

Southern  District  (Alabama, 
Georgia,  Tennessee,  Virginia, 
Maryland) . 

127 

238 

639 

1,554 

1,491 

1,785 

Other  States . 

356 

485 

319 

790 

546 

770 

Total  for  the  United  States  .  . 

2,549 

3,835 

4,044 

9,203 

9,446 

11,773 

ore  meets  the  coal,  —  Cleveland,  Toledo,  Chicago,  and  the 
rest.  Not  less  striking  is  the  rate  of  growth  in  the  Southern 
District,  of  which  Alabama  is  the  most  important  State. 
While  the  total  production  here  is  far  outweighed  by  that  in 
the  Central  District,  it  now  exceeds  that  in  the  East,  and 
bids  fair  to  continue  to  do  so. 

\ 

Before  we  close  this  review  of  the  forces  which  have  been 
at  work  in  the  iron  industry,  some  other  aspects  of  the  sub¬ 
ject  deserve  brief  attention.  Here,  as  elsewhere,  the  labor 
situation  and  the  trade-union  movement  have  had  their  in¬ 
fluence.  But  the  power  of  the  labor  unions  among  the  iron 

1  In  this  table  the  figure  for  eastern  Pennsylvania  is  for  the  iron  smelted  in 
the  State  with  anthracite,  or  anthracite  and  coke  mixed,  while  that  for  western 
Pennsylvania  is  for  the  bituminous  (coke)  iron. 


586 


ECONOMIC  HISTORY. 


workers  has  been  less  in  the  United  States  than  in  Great 
Britain  ;  and  this  fact  has  been  of  no  small  consequence.  It 
is  true  that  the  Amalgamated  Association  of  Iron  and  Steel 
Workers  has  long  been  a  firm  and  powerful  organization, 
modelled  on  the  British  unions  and  strong  in  its  bargaining 
with  the  employers.1  But  some  of  the  large  iron  and  steel 
establishments  have  been  non-union ;  and  their  competition, 
as  well  as  the  example  they  set  of  a  possible  cutting-loose 
from  the  organized  laborers,  imposed  a  strong  check  on  the 
union’s  control  of  the  conditions  of  employment.  The  largest 
of  the  American  establishments,  the  Carnegie  Company,  thus 
cut  loose  from  the  union,  as  a  consequence  of  the  great  strike 
—  fairly  a  pitched  battle  — at  the  Homestead  works  in  1892. 
The  consequence  has  been  that  the  American  iron  and  steel 
master  has  felt  more  free  than  his  British  rival  to  push  on 
with  new  processes,  to  remodel  his  organization,  to  readjust 
his  labor  force. 

No  doubt,  in  the  talk  of  the  average  business  man,  there  is 
much  exaggeration  of  the  dictates  of  labor  unions,  and  many 
an  impossible  claim  to  attend  to  his  own  affairs  in  his  own 
way.  But,  on  the  other  hand,  whatever  may  be  one’s  sympa¬ 
thy  with  labor  organizations,  it  is  not  to  be  denied  that  a 
firmly  organized  trade-union  tends  to  present  a  stolid  opposi¬ 
tion  to  change  and  to  improvements.  This  is  but  human 
nature.  The  first  effect  of  a  new  machine  or  a  better  rear¬ 
rangement  is  to  displace  or  discommode  some  laborers ;  while 
the  disposition  to  “  make  work,”  however  disavowed  overtly, 
is  too  deep-rooted  to  permit  labor-saving  changes  to  be  made 
without  strong  though  silent  opposition.  Even  where  no 
open  resistance  is  offered,  the  mere  existence  of  a  strong  and 
all-inclusive  union,  not  to  be  fought  without  heavy  loss,  has 
often  a  benumbing  influence,  preventing  the  very  considera¬ 
tion  of  radical  changes,  and  keeping  industry  in  its  estab¬ 
lished  grooves.  Such  has  been  one  of  the  effects  of  the 
strong  organization  of  English  iron  workmen  (the  engineers) ; 
and  the  great  strike  between  them  and  their  employers  in 

1  See  the  account  of  the  organization,  by  Carroll  D.  Wright,  in  The  Quarterly 
Journal  of  Economics,  vol.  vii.  p.  400  (July,  1893). 


THE  AMERICAN  IRON  INDUSTRY. 


587 


1898  was  at  bottom  due  to  this  consequence  of  their  strength. 
For  good  or  ill  the  American  iron  industry  has  been  compara¬ 
tively  free  from  this  benumbing  influence.  For  good,  in  that 
the  advance  of  the  art  of  production  has  been  unrestrained ; 
for  ill,  in  that  the  workman,  as  is  inevitable  when  standing 
alone,  has  bargained  on  unequal  terms  with  a  powerful  em¬ 
ployer,  and  has  been  compelled  often  to  accede  to  long  hours 
and  harsh  conditions. 

One  other  of  the  social  aspects  in  the  growth  of  the  iron 
industry  deserves  attention :  its  connection  with  the  coal 
trade,  and  with  some  of  the  labor  problems  that  have  arisen 
in  that  allied  industry.  The  dominant  position  of  the  Pitts¬ 
burg  coal  district  has  been  repeatedly  referred  to  in  the  pre¬ 
ceding  pages.  For  the  iron  trade  the  most  important  section 
of  that  district  is  the  famed  Connellsville  coke  region,  lying 
some  fifty  miles  south  of  Pittsburg,  along  the  banks  of  the 
Yougliiogheny  River.  Here  is  a  level  and  uniform  outcrop  of 
the  best  coking  coal ;  and  from  this  has  come  most  of  the 
coke  used  in  smelting  Lake  Superior  ores,  and,  indeed,  the 
greater  part  of  that  used  in  the  United  States.  Important 
supplies  have  come  also  from  other  near-by  regions  in  Penn¬ 
sylvania  and  West  Virginia;  and  Alabama  has  made  from 
her  own  coal  the  coke  for  smelting  her  iron.  But  the  Con¬ 
nellsville  coke  is  by  far  the  most  important  contributor,  and 
alone  supplies  more  than  half  of  the  total  used  in  the  country. 

The  price  of  coke  has  gone  down  markedly  in  the  last 
twenty  years,  in  sympathy  with  the  price  of  bituminous  coal 
generally.  Thirty  years  ago  coke  at  the  ovens  was  sold  for 
$3  a  ton.  In  recent  years  the  price  has  been  on  the  average 
not  far  from  11.50  a  ton,  and  in  times  of  depression  less  than 
81  a  ton.  Fuel  has  been  turned  out  for  the  American  iron¬ 
master  at  prices  lower  than  those  paid  by  his  rivals  in  any 
part  of  the  world;  while  low  rates  of  transportation  have 
enabled  the  cheap  fuel  to  be  carried  to  furnaces  near  and  dis¬ 
tant,  without  the  loss  of  this  cardinal  advantage. 

Here,  as  in  the  mining  and  transportation  of  the  ore,  and 
in  the  practice  at  the  furnace  and  the  mill,  cheapness  has  been 
secured,  but  by  methods  that  are,  in  part  at  least,  vitally  dif- 


588 


ECONOMIC  HISTORY. 


ferent.  There  has  been,  indeed,  the  same  bold  adventure  in 
opening  new  sources  of  supply,  the  same  conduct  of  indus¬ 
try  on  a  great  scale,  the  same  firm  organization  in  direct 
connection  with  the  iron  and  steel  industries.  But  the  nature 
of  the  operations  caused  cheapness  to  be  attained  at  the  coal 
mines  and  coke  ovens,  not  only  by  machinery  and  organiza¬ 
tion,  but  also,  to  no  small  extent,  by  cheap  labor.  The  min¬ 
ing  of  coal  is  mainly  pick-and-shovel  work,  requiring  little 
handicraft  skill  or  trained  intelligence  ;  and  this  is  still  more 
true  of  the  work  at  the  coke  ovens.  The  coal  mines  of  the 
United  States  have  drawn  to  themselves  the  lowest  and  poorest 
kinds  of  manual  labor  ;  except,  indeed,  where  machines  for 
cutting  the  coal  have  proved  applicable,  and  skilled  and  intelli¬ 
gent  mechanics  have  consequently  been  called  on  to  work 
them.  The  miners  in  England  seem  to  have  maintained  a 
better  relative  position.  Their  trade  organization  has  been 
strong,  the  standard  of  living  and  of  efficiency  comparatively 
high.  In  the  United  States  multitudes  of  newly  arrived  im¬ 
migrants  have  been  drawn  to  the  mines,  partly  through  de¬ 
liberate  arrangement  by  the  employers,  partly  through  the 
silent  adjustment  of  supply  to  demand.  There  they  have 
huddled,  inert,  stolid,  half-enslaved.  The  nationalities  that 
have  contributed  of  late  years  so  heavily  to  our  immigration 

—  the  Italians,  Bohemians,  Hungarians,  Poles,  and  what  not 

—  have  here  found  employment  such  as  they  could  at  once 
turn  to.  In  times  of  activity  their  condition  is  passable,  and 
doubtless  better  than  it  had  been  in  their  homes  beyond  the 
sea.  In  times  of  depression  and  low  prices  the  barest  living 
is  all  they  can  secure,  and  sometimes  not  that.  The  Ameri¬ 
can  or  Americanized  laborers  of  higher  standards  have  met  a 
disheartening  competition,  and  have  vainly  tried  to  stem  the 
tide  of  falling  wages  and  half-employment,  with  the  attendant 
misery,  strikes,  riots,  bloodshed.1 

Here  once  more  we  touch  phenomena  that  lie  mainly  out- 

1  See,  among  others,  the  article  by  J.  E.  George,  in  The  Quarterly  Journal  oj 
Economics,  vol.  xiii.  pp.  186,  447  (January  and  July,  1898).  Compare  with  the 
same  writer’s  more  recent  articles  in  the  Jahrbilcher  Jur  Nationaloekonomie,  vol. 
xviii.  Nos.  4,  5.  The  similar  conditions  in  the  anthracite  region  are  described  by 
G.  0.  Virtue  in  the  Bulletin  of  the  Department  of  Labor  for  November,  1897. 


THE  AMERICAN  IRON  INDUSTRY. 


589 


side  the  scope  of  the  present  inquiry.  The  growth  of  the  coal 
industry  is  a  subject  by  itself,  presenting  peculiarities  of  its 
own.  “  Overproduction  ”  has  been  its  constant  cry  ;  and  un¬ 
deniably  there  has  been  a  pressure  on  the  market  of  a  large 
and  constantly  enlarging  supply  of  coal.  The  continued  open¬ 
ing  of  new  mines,  with  all  the  chances  of  reaping  a  fortune 
from  the  combination  of  mining  and  railway  ventures,  has 
proceeded  with  feverish  and  excessive  activity  ;  and,  certainly, 
it  is  this  gilded  opportunity  which  has  caused  the  systematic 
agglomeration  of  cheap  labor  in  the  bituminous  coal  districts 
the  country  over.  It  may  be,  also,  that,  even  under  condi¬ 
tions  of  comparative  stability  (as  in  the  anthracite  regions, 
where  no  new  fields  are  available),  the  nature  of  the  indus¬ 
try,  the  extreme  difficulty  of  stopping  a  mine  when  once  in 
operation,  the  strong  inducement  to  work  it  continuously  at 
its  maximum  capacity,  —  such  causes  as  these  may  lead  in¬ 
evitably  and  recurrently  to  mounting  output  and  cut-throat 
competition.  Both  sets  of  causes  probably  have  been  at  work 
in  bringing  about  the  special  severity  of  periods  of  depression 
in  the  coal  and  coke  districts. 

At  all  events,  a  bitter  competition  has  intensified  the  evil 
social  conditions  which  must  emerge  where  great  masses  of 
ignorant  laborers  are  congested  in  out-of-the-way  places. 
Truck-shops,  low  wages,  semi-feudal  conditions,  cheap  coal, 
have  meant  a  cheap  man.  At  the  iron  mines  the  conditions 
seem  to  have  favored  the  better  mode  of  securing  cheapness,  — 
vigorous  and  intelligent  labor,  using  highly  elaborated  machin¬ 
ery.  Such,  too,  has  been,  in  greater  degree  at  least  than  at 
the  coal  mines,  the  direction  in  which  improvement  has 
marched  in  the  railways,  on  the  vessels,  at  the  docks,  in  the 
iron  and  steel  works.  But  at  the  very  foundation  of  the 
industry,  at  the  coal  mine  and  the  coke  oven,  we  have  a 
social  sore.  Perhaps  it  is  but  temporary :  this  great  and 
vigorous  organism  of  ours  may  absorb  the  foul  matter,  even 
though  it  be  steadily  fed  from  without  by  new  accretions. 
But  foul  it  is,  and  remains.  When  Jevons,  a  generation  ago, 
surveyed,  doubtless  with  some  excess  of  pessimism,  the  coal 
trade  of  Great  Britain,  he  warned  his  countrymen  that  their 


590 


ECONOMIC  HISTORY. 


great  structure  of  material  wealth  rested  on  a  foundation  of 
brutislmess  and  pauperism.1  We  have  been  wont  to  thank 
God  that  we  are  not  as  other  peoples.  But  the  plague  is  on 
us  also ;  and  we,  too,  must  face  the  social  responsibilities  it 
involves. 

Thus  the  growth  of  the  iron  industry  illustrates  all  the  ex¬ 
tremes  of  the  industrial  revolution  which  has  taken  place  in 
the  United  States  since  the  Civil  War.  Unfettered  enterprise, 
unrestrained  competition,  have  worked  their  utmost.  The 
eager  search  for  new  resources  in  the  earth’s  crust  has  gone 
on  with  feverish  haste.  The  march  of  the  arts  has  led  to 
unceasingly  wider  utilization  of  the  forces  of  nature.  Produc¬ 
tion  on  the  great  scale  has  advanced,  until  the  huge  enter¬ 
prises  seem  almost  ready  to  crush  the  foundations  on  which 
they  rest  or  topple  over  of  their  own  weight.  Fabulous  riches, 
and  misery  and  squalor  most  abject,  alike  have  come  with 
this  marvellous  transformation;  and  the  twentieth  century 
dawns  with  new  conditions,  new  problems,  new  duties. 

1  The  Coal  Question  (1866),  Preface,  p.  xxiii. 


LE  XIX *  SIECLE. 


591 


XXII. 

LE  XIXe  SIECLE. 

G.  de  MOLINARI. 

From  Journal  des  Economistes,  15  janv.  1901,  pp.  5-19. 

I 

LE  trait  caracttristique  du  siecle  qui  vient  de  finir,  ce  qui 
^  le  distingue  de  tous  ceux  qui  Font  prtctdt,  c’est  le  dt- 
veloppement  extraordinaire  de  la  puissance  productive  de 
Fhomme.  Par  la  conquOte  et  l’asservissement  des  forces 
mtcaniques  et  chimiques,  ajouttes  ou  substitutes  a  sa  force 
physique  dans  F  oeuvre  de  la  production,  il  a  pu  augmenter, 
dans  des  proportions  qui  eussent  semblt  autrefois  invraisem- 
blables,  les  mattriaux  de  la  vie.  On  aura  une  idte  de  ce  progrts, 
accompli  surtoufc  dans  la  seconde  moitit  du  sitcle,  en  consul- 
tant  les  tableaux  de  l’accroissement  de  la  richesse  aux  Etats- 
Unis,  c’est-El-dire  dans  le  pays  ou  Findustrie  est  arrivte  a  son 
plus  haut  point  de  productivity.  Tandis  qu’en  1850  la  rich¬ 
esse  de  l’Union  amtricaine  n’ttait  tvalute  qu’a  7  milliards  135 
millions  de  dollars,  soit  a  308  dollars  par  ttte,  elle  s’tlevait, 
d’aprts  le  dernier  recensement  de  1900,  a  90  milliards,  soit  a 
1.180  dollars  par  tete.  Dans  la  derni&re  dtcade  seule,  Faug- 
mentation  avait  ttt  de  35  milliards,  —  une  somme  de  rich- 
esses  plus  considerable,  au  dire  du  Dr  Powers,  que  celle  que  le 
continent  amtricain  tout  entier  avait  pu  accumuler  depuis  la 
dtcouverte  de  Christophe  Colomb  jusqu’au  commencement  de 
la  guerre  de  la  Secession.  II  y  a  sans  doute  quelque  chose  h 
rabattre  dans  cette  statistique  americaine,  et  nous  devons  con¬ 
fessor,  en  toute  humility,  que  la  richesse  de  l’Europe  n’a  pas 
fait  depuis  un  demi-sibcle  une  aussi  prodigieuse  enjambte; 
mais  nous  pouvons  conjecturer,  d’aprbs  les  chiffres  du  rende- 


592 


ECONOMIC  HISTORY. 


ment  dcs  impots,  sans  parler  d’autres  indices,  que  dans  tous 
les  pays  ou  le  vieil  outillage  de  la  production  industrielle  et 
agricole  a  dtd  transforme  et  renouvele,  la  richesse  s’est  accrue 
dans  une  proportion  au  moins  double  de  celle  de  l’augmenta- 
tion  de  la  population,  malgrd  les  charges  et  les  obstacles  de 
tous  genres  que  les  vices  et  l’ignorance  des  gouvernements 
aussi  bien  que  ceux  des  gouvernds  opposent  a  son  ddveloppe- 
ment  naturel  et  rdgulier. 

On  s’expliquera  ce  phdnomdne,  si  l’on  songe  a  la  somme 
dnorme  de  travail  a  bon  marchd  que  nous  ont  procurde  l’in- 
vention  et  les  perfectionnements  successifs  de  la  machine  a 
vapeur.  On  estime  au  plus  bas  mot  que  le  travail  d’un  cheval- 
vapeur  dquivaut  a  celui  de  10  hommes.  Or,  la  statistique 
officielle  nous  apprend  que  le  nombre  des  chevaux-vapeur 
s’est  dlevd  en  France  de  60.000  en  1840  k  6.800.000  en  1897. 
C’est  done  une  somme  de  travail  dgal  a  celle  de  63  millions 
d’hommes  qui  a  dtd  mise  au  service  de  l’industrie  frangaise. 
Et  non  seulement  ce  travail  est  plus  dconomique  de  tout  la 
diffdrence  du  prix  de  la  houille,  nourriture  de  la  machine,  et 
de  celui  de  l’alimentation  vdgetale  ou  animale  de  l’homme, 
mais  encore  il  ddveloppe  une  puissance  et  obtient  des  rdsultats 
qu’aucun  ddploiement  de  forces  humaines  ne  pourrait  at- 
teindre.  On  aurait  beau  accumuler  une  masse  de  travail 
lmmain  ddcuple  de  celle  de  la  machine  d’un  train  express, 
c’est  a  peine  si  l’on  obtiendrait  une  vitesse  dix  fois  moindre. 
Et  en  supposant  que  des  milliers  d’hommes  echelonnds  a  portae 
de  la  voix  fussent  employes  a  transmettre  un  message,  leur 
travail  serait  impuissant  k  rivaliser  de  vitesse  avec  celui  du 
tdldgraphe,  tout  en  coutant  des  milliers  de  fois  plus  cher. 

Mais  l’accroissement  de  la  quantity  des  produits  et  des  ser¬ 
vices  qui  constituent  la  richesse  n’a  pas  dtd  le  seul  ni  peut- 
dtre  m^rne  le  plus  important  rdsultat  de  la  transformation  de 
la  machinerie  de  l’industrie  ;  elle  en  a  eu  deux  autres  d’une 
portde  superieure,  en  dlevant  la  nature  du  travail  rdservd  k 
rhomme  dans  l’ceuvre  de  la  production,  et  en  Cendant  avec 
la  sphere  des  ^changes  celle  de  la  solidarity  humaine. 

Les  machines  ne  fournissent  qu’un  travail  materiel  dont  les 
operations  doivent  dtre  dirigdes  ou  tout  au  moins  surveilldes 


LE  XIXe  SlECLE. 


593 


par  l’intelligence  de  l’homme.  Si  elles  le  dispensent  d’un 
effort  physique,  elles  exigent  une  application  constante  de  sa 
force  intellectuelle  et  elles  engagent  souvent  au  plus  haut 
degrd  sa  responsabilitd  morale.  Un  conducteur  de  locomotive 
et  un  aiguilleur,  par  exemple,  ne  ddpensent  dans  leur  journde 
qu’une  faible  somme  de  force  physique,  mais  leur  attention 
doit  etre  appliqude  sans  rel&che  a  l’opdration  qui  leur  est  con¬ 
fide.  Si  leur  intelligence  n’y  est  pas  suffisamment  tendue, 
s’ils  n’ont  qu’a  un  faible  degrd  le  sentiment  de  leur  responsa¬ 
bilitd,  ce  ddfaut  d’application  a  leur  devoir  peut  causer  la 
perte  de  centaines  de  vies,  sans  parler  des  dommages  pure- 
ment  matdriels.  Mais  l’exercice  de  l’intelligence  et  de  la  res¬ 
ponsabilitd  ont  pour  effet  naturel  de  ddvelopper  les  facultds 
mises  en  oeuvre,  et  c’est  ainsi  que  le  niveau  intellectuel  et 
moral  des  ouvriers  qui  dirigent  ou  surveillent  le  travail  des 
machines  apparait  dans  toutes  les  branches  d’industrie  que  le 
progrds  a  touchdes  comme  manifestement  supdrieur  a  celui 
des  simples  manoeuvres  qui  font  l’office  de  machines. 

Le  progrds  industriel  n’a  done  pas  eu  seulement  pour  effet 
d’augmenter  la  quantitd  des  produits,  il  a  dleve,  pour  ainsi 
dire,  la  qualite  des  producteurs.  II  a  eu  encore  un  autre 
effet,  non  moins  bienfaisant,  c’est  d’dtendre  et  de  multiplier 
les  liens  de  solidaritd  entre  les  homines.  Dans  les  sidcles  qui 
ont  prdcdde  le  notre,  la  splidre  de  la  solidaritd  ne  depassait 
gudre  les  frontieres  des  Etats.  Les  membres  de  chaque  na¬ 
tion  formaient  une  socidtd  d’assurance  mutuelle  contre  le 
risque  d’invasion  et  de  pillage,  quand  ils  n’dtaient  pas  eux- 
memes  envahisseurs  et  pillards.  S’ils  dtaient  intdressds  a  la 
prospdritd  les  uns  des  autres,  ils  ne  l’dtaient  point  a  celle 
des  membres  des  autres  nations.  Ils  avaient,  au  contraire, 
intdrdt  a  la  diminution  des  forces  et  des  ressources  des  peuples 
avec  lesquels  ils  dtaient  continuellement  en  guerre.  Cet  dtat 
de  choses  a  changd,  la  solidaritd  a  succddd  a  l’antagonisme, 
lorsque  les  dchanges  ont  associd  les  interdts  des  individus  ap- 
partenant  a  des  nations  diffdrentes.  Or,  c’est  l’accroissement 
de  la  productivitd  de  l’industrie  qui  a  provoqud  en  la  ndeessi- 
tant  l’extension  de  la  sphere  des  dchanges.  Lorsque  le  tra¬ 
vail,  assiste  par  une  machinerie  de  plus  en  plus  puissante, — 


594 


ECONOMIC  HISTORY. 


et  pour  emprunter  un  exemple  au  rapport  de  Michel  Chevalier 
sur  l’Exposition  de  1867,  lorsque  l’introduction  du  moteur 
circulaire  a  porte  de  80  a  480.000  le  nombre  de  mailles  qui 
peuvent  etre  confectionn^es  en  une  minute  dans  la  fabrication 
des  tricots,  —  le  marclie  local  a  cesse  de  suffire  a  cette  produc¬ 
tion  exub^rante,  il  a  fallu  agrandir  son  debouche,  et  il  en  a 
etd  ainsi  dans  toutes  les  industries  ou  le  travail  a  la  machine 
se  subs  tit  uait  au  travail  a  la  main.  Alors,  pour  rdpondre  a 
ce  besoin  d’extension  des  marches  s’est  produite  une  demande 
extraordinaire  de  progrds  des  mojens  de  communication.  Les 
inventeurs,  utilisant  les  ddcouvertes  de  la  science,  se  sont  ap¬ 
pliques  a  satisfaire  a  cette  demande ;  la  vapeur,  puis  l’dlec- 
tricitd  ont  dtd  employees  h  surmonter  l’obstacle  des  distances. 
780.000  kilometres  de  chemins  de  fer,  1.800.000  kilometres  de 
lignes  tdlegraphiques,  construits  presque  en  totalitd  dans  la 
seconde  moitie  du  sifecle,  des  lignes  de  navigation  a  vapeur  qui 
dtablissent  des  communications  rdgulieres  entre  les  parties  les 
plus  dloigndes  du  globe  ont  commence  P  oeuvre  de  Purification 
des  marches  des  produits,  des  capitaux  et  du  travail. 

Malgre  les  obstacles  que  cette  extension  de  la  sphere  des 
^changes  a  rencontres  dans  les  interets  attaches  a  l’ancien 
etat  des  choses,  elle  se  poursuit  avec  une  force  d’impulsion 
irresistible,  et  on  peut  deja  en  apprdcier  la  portae  finale  en 
comparant  l’etat  de  developpement  des  rapports  economiques 
des  nations  au  debut  et  a  la  fin  du  sifecle. 

Nous  n’avons  que  des  donnees  partielles  et  incertaines  sur 
le  commerce  exterieur  des  nations  civilisees  dans  les  siecles 
precedents ;  nous  savons  seulement  que  le  commerce  de  l’An- 
gleterre  en  1800  n’atteignait  pas  2  milliards  de  francs  1  et  que 
celui  des  autres  nations  reunies  s’eievait  a  peine  a  ce  chiffre ; 
en  sorte  que  le  commerce  du  monde  civilise  tout  entier  ne 
depassait  pas  le  commerce  actuel  de  la  Belgique.  M.  Levas- 
seur  l’evaluait  dernierement  a  87  milliards  pour  la  periode 
1894-95, 2  c’est-ft-dire  qu’il  aurait  au  moins  vingtupie  dans  le 
cours  du  siecle.  Le  commerce  international  des  capitaux  ne 
s’est  pas  moins  developpe  que  celui  des  produits.  La  statis- 

1  30.570.000  liv.  st.  a  l’importation  et  43.152.000  liv.  st.  a  l’exportation. 

2  L’injluence  des  voies  de  communication  au  xix*  siecle,  par  E.  Levasseur,  p.  12. 


LE  XIX'  SlECLE. 


595 


tique  ne  nous  fournit,  a  la  v6rit6,  aucune  donn^e  sur  la  pro¬ 
duction  du  capital  dans  la  periode  qui  a  prdc^de  l’avbnement 
de  la  grande  industrie,  et  elle  ne  nous  renseigne  encore  que 
d’une  manidre  approximative  sur  son  importance  actuelle. 
M.  Robert  Giffen  a  y  valuy  a  200  millions  sterl.  —  5  milliards  de 
francs  —  le  montant  de  Fepargne  annuelle  du  Royaume-Uni, 
ce  qui  est  peut-^tre  excessif.  Mais  on  peut  affirmer  avec  cer¬ 
titude  que  la  productivity  de  l’epargne  s’est  accrue  avec  celle 
de  l’industrie,  et  on  sait  que  les  pays  ou  la  production  des 
capitaux  s’est  particuli£rement  dyvelopp^e,  l’Angleterre,  la 
France,  la  Belgique,  la  Suisse,  l’Allemagne,  en  fournissent  des 
quantit^s  croissantes  au  reste  du  monde.  La  transformation 
de  l’outillage  de  la  production  industrielle  et  agricole,  sans 
oublier  celle  du  matyriel  de  guerre,  maritime  et  terrestre,  en 
a  demande  des  quantitys  ynormes,  surtout  dans  le  dernier 
quart  de  stecle.  Seule,  la  construction  des  cliemins  de  fer  en 
a  absorby  environ  200  milliards.  Mais,  non  moins  que  Im¬ 
portation  des  produits,  celle  des  capitaux  crye  et  multiplie  les 
liens  de  solidarity  entre  les  peuples.  Les  pays  importateurs 
de  capitaux  sont  intyressys  a  la  prospyrity  de  ceux  qui  les 
produisent,  afin  de  les  obtenir  en  abondance  et  a  bon  marchy, 
les  pays  exportateurs  le  sont  plus  encore  a  celle  de  leurs 
dybiteurs. 

Le  dyveloppement  de  la  production,  dyterminy  par  la  crea¬ 
tion  d’une  machinerie  a  la  fois  plus  puissante  et  plus  econo- 
mique,  a  elargi  aussi,  quoique  dans  une  proportion  moindre, 
les  dybouchys  du  travail.  La  population  s’est  accrue  dans  la 
mesure  de  l’extension  de  son  debouchy;  elle  a  doubly  en 
Europe  dans  le  cours  du  xixe  si£cle,  et  elle  a  fourni,  en  outre, 
a  Immigration  un  contingent  qui  a  dypassy  en  une  seule  annye 
celui  qu’elle  lui  fournissait  auparavant  en  un  stecle.  De 
10.000  individus  en  1820,  immigration  s’est  yievye  a  871.000 
en  1887  et,  en  l’espace  de  quatre-vingts  ans,  elle  n’a  pas  porty 
moins  de  15  millions  d’hommes  de  race  blanche  dans  les 
autres  parties  du  globe.  Ces  ymigrants  ont  fycondy  par  leur 
travail  et  acquis  au  domaine  de  la  civilisation  d’immenses  ry> 
gions,  dont  les  ressources  naturelles  demeuraient  improduc- 
tives ;  ils  ont  fait  souche  de  peuples  nouveaux,  approvisionny 


596 


ECONOMIC  HISTORY. 


1’ Europe  de  matieres  premieres  et  de  demies  alimentaires, 
agraudi  les  debouches  de  son  industrie  et  btendu,  avec  la 
sphere  de  Exchange,  celle  de  la  solidarity  des  interets. 

Telle  a  etb  l’oeuvre  capitale  du  xixe  sibcle,  et  la  meilleure 

* 

part  de  son  actif.  A  des  Etats  isolbs  et  politiquement  liostiles, 
il  a  commence  a,  substituer  des  nations  bconomiquement  unies 
par  les  liens  de  plus  en  plus  nombreux  et  series  de  l’bchange. 
Et  cette  extension  de  la  sphere  de  Exchange  a  eu,  en  merne 
temps,  pour  rbsultat  d’internationaliser  le  progrbs  lui-meme. 
Toutes  les  nations  se  trouvant  dbsormais  en  concurrence,  leurs 
industries  sont  obligees  de  s’assimiler  tous  les  progrbs  rbalisbs 
ailleurs,  sous  peine  d’etre  exelues  du  marchb  gbnbral,  et  merne 
de  leur  propre  marchb.  Au  commencement  du  siecle  ces 
progrbs  qui  multipliaient  les  produits  en  abaissant  les  frais  de 
la  production  btaient,  pour  ainsi  dire,  le  monopole  de  l’Angle- 
terre.  Apres  s’etre  efforcbs  de  se  protbger  contre  eux,  par  les 
barrieres  de  la  douane,  les  industries  du  continent  out  com- 
pris  la  nbcessitb  de  les  imiter,  et  c’est  ainsi  que  les  produits 
manufactures  de  la  France,  de  la  Suisse  et,  en  dernier  lieu, 
de  l’Allemagne,  ont  rbussi,  grace  au  stimulant  de  la  concur¬ 
rence  britannique,  a  depasser  en  quantitbs  croissantes  les 
frontieres  du  marchb  national. 

Aujourd’hui  a  surgi  un  nouveau  concurrent,  l’industrie  amb- 
ricaine,  armbe  de  machines-outils  qui  abaissent  encore  les  prix 
de  revient,  demain  surgira  peut-etre  la  concurrence  chinoise, 
dont  la  bienfaisante  influence  s’ajoutera  h  celle  de  la  concur¬ 
rence  ambricaine  pour  provoquer  en  Europe  un  mouvement 
de  rbforme  des  impedimenta  politiques,  fiscaux,  protection- 
nistes,  qui  blbvent  artificiellement  le  prix  des  matbriaux  de  la 
vie. 

Avons-nous  besoin  d’ajouter  que  des  sibcles  se  passeront 
avant  que  l’humanitb  soit  exposbe  a  produire  plus  qu’elle  ne 
peut  consommer.  Malgrb  l’essor  que  la  conqubte  d’un  contin¬ 
gent  colossal  de  forces  naturelles  est  en  train  d’imprimer  a  sa 
capacitb  productive,  l’humanitb  est  encore  pauvre,  tres  pauvre, 
et  il  faudra  que  sa  production  annuelle  soit  au  moins  dbcuplbe 
pour  lui  assurer  une  modeste  aisance. 

Mais  c’est  seulement  par  l’extension  de  l’organisme  de  la 


LE  XIX*  SlECLE. 


597 


production  et  de  l’^change  que  le  travail,  assists  des  forces  de 
la  nature,  pourra  satisfaire  avec  une  abondance  de  plus  en  plus 
grande  les  besoins,  encore  aujourd’hui  si  incompl&tement  des- 
servis,  de  la  consommation.  Or  cet  organisme  est  d’une  sen¬ 
sibility  extreme,  et  a  mesure  qu’il  s’ytend  et  solidarise  des 
intdrets  plus  noinbreux  dans  les  diff^rentes  parties  du  globe, 
les  causes  de  perturbation,  telles  que  les  guerres  et  les  autres 
calamites  dues  aux  vices  et  a  Fignorance  des  gouvernements 
et  des  individus,  qui  se  manifestent  sur  un  point  du  marchd 
agrandi  des  y  changes,  se  r^percutent  sur  tous  les  autres.  Ces 
causes  de  desordre  et  de  mine  n’ont  pas  cessd  de  se  multiplier 
et  meme  de  s’aggraver  dans  le  cours  du  si^cle,  et,  en  regard 
des  progres  qui  constituent  son  actif,  elles  ont  produit  un 
passif  qui  a  absorb^,  sinon  la  totality,  au  moins  une  part  trop 
considyrable  de  cet  actif  de  progres. 

ii 

II  semblerait  que  l’accroissement  extraordinaire  du  com¬ 
merce  international,  en  dyveloppant  entre  les  peuples  la  solid¬ 
arity  des  intyrets  et  en  augmentant,  par  la  meme,  le  besoin  de 
la  paix,  eut  du  rendre  les  guerres  plus  rares.  On  pouvait 
d’autant  plus  se  bercer  de  cette  espyrance  que  les  progres  de 
l’industrie  augmentaient  chaque  jour  le  nombre  et  la  richesse 
de  la  classe  dirigeante  de  la  production  et  lui  valaient  une 
part  d’influence  plus  considyrable  dans  le  gouvernement  des 
Etats.  Cependant,  il  n*en  a  pas  yty  ainsi.  Les  guerres  n’ont 
pas  yty  moins  nombreuses  au  xixe  sifecle,  et  elles  ont  yty  bien 
autrement  destructives  et  couteuses  qu’elles  ne  l’avaient  yty 
au  xvme. 

Nous  ne  possydons  pas  le  compte  des  vies  humaines  que  la 
guerre  a  consommees  depuis  les  dernibres  anises  du  rkgne  de 
Louis  XIV  jusqu’a  la  Ryvolution  frangaise,  mais  c’est  le  porter 
fort  haut  que  de  Fyvaluer  a  un  million.  Les  armyes  ytaient 
alors  peu  nombreuses  et  les  difficultys  du  recrutement  obli- 
geaient  les  gynyraux  h,  mynager  la  vie  de  leurs  soldats.  La 
Ryvolution  a  changy  cet  ytat  de  choses  en  mettant  &  la  dis¬ 
position  des  chefs  des  armyes  rypublicaines  ou  impyriales 


598 


ECONOMIC  HISTORY. 


un  nombre  illimite  de  rdquisitionnaires  ou  de  consents.  Ils 
ont  obtenu  ainsi  un  avantage  d^cisif  sur  leurs  adversaires, 
accoutumds  aux  pratiques  de  l’ancien  systkme,  et  Ton  sait  que 
Moreau  qualifiait  Napoleon  de  vainqueur  a  raison  de  10.000 
liommes  par  lieure.  Le  peu  de  ddveloppement  du  credit  pub¬ 
lic  obligeait  de  meme  les  gouvernements  a  limiter  leurs  arme- 
ments,  et  a  conclure  la  paix  aussitot  que  leur  tr^sor  etait 
^puise.  La  faible  augmentation  des  dettes  publiques  dans  le 
cours  du  xvme  si£cle  nous  fournit  a  cet  dgard  une  indication 
positive.  D’aprks  une  statistique  dress^e  par  Dudley-Baxter, 
elles  ne  se  seraient  accrues  que  de  5  milliards  dans  la  pdriode 
de  1715  a  1793 1;  mais,  a  dater  de  cette  dpoque,  on  voit  l’in- 
dustrie  destructive  de  la  guerre  prendre  un  essor  plus  pro- 
digieux  encore  que  celui  des  industries  productives.  Les 
guerres  de  la  Revolution  et  de  1’ Empire  consommkrent  en¬ 
viron  5  millions  d’hommes ;  et  ce  compte  s’est  particulRre- 
ment  accru  dans  la  seconde  moitie  du  sikcle.  En  additionnant 
les  victimes  de  la  guerre  depuis  la  Revolution,  on  est  arrive  au 
monstrueux  total  de  9.840.000,  prfes  de  120  millions  pour  les 
pays  appartenant  a  notre  civilisation.  La  consommation  des 
capitaux  a  progresse  plus  rapidement  encore  que  celle  des 
liommes.  En  sus  des  depenses  couvertes  annuellement  par 
l’impot,  la  guerre  et  la  paix  armee,  autrement  dit  la  prepara¬ 
tion  &  la  guerre,  ont  participe  pour  cent  milliards,  au  plus  bas 
mot,  a  l’augmentation  des  dettes  publiques  dans  le  cours  du 
stecle. 

Cependant,  ce  qui  etait  jadis  la  raison  d’etre  de  la  guerre  a 
cesse  d’exister.  Aussi  longtemps  que  les  peuples  civilises 
ont  ete  menaces  de  destruction  ou  tout  au  moins  de  deposses¬ 
sion  par  les  invasions  des  barbares,  la  guerre  a  ete  une  neces- 
site.  Car  il  fallait  bien  s’assurer  contre  un  peril  toujours 
imminent  et  inevitable. 

Mais  grace  aux  progres  du  materiel  et  de  l’art  de  la  de¬ 
struction  —  et  ces  progres  n’ont  pas  ete,  pour  le  dire  en  pas¬ 
sant,  moins  utiles  que  ceux  du  materiel  et  des  arts  de  la 
production  —  ce  peril  a  disparu.  Les  peuples  civilises  enva- 
hissent  au  contraire  et  s’approprient  les  regions  occupees 

1  Dudley  Baxter,  National  Debts. 


LE  XIX*  SltiCLE. 


599 


par  lenrs  anciens  envahisseurs.  La  guerre  ne  s’impose  plus 
a  eux.  Elle  depend  de  leur  volonte. 

II  s’agit  done  de  savoir  s’ils  ont  encore  int^ret  a  la  youloir. 
Get  intergt  existait  sans  aucun  doute  pour  les  aristocraties 
qui  trouvaient  dans  la  conquete  d’un  Etat  ou  d’une  province 
un  supplement  de  serfs  ou  de  sujets  qui  leur  fournissaient, 
par  les  corv^es  les  redevances  ou  les  impots,  un  supplement 
de  revenus.  Mais  que  peut  bien  rapporter  la  conquete  de  la 
province  ou  de  l’Etat  le  plus  riche  a  une  nation  qui  demande 
ses  moyens  de  subsistance  non  plus  au  pillage  ou  k  l’exploita- 
tion  du  travail  de  ses  esclaves,  de  ses  serfs  ou  de  ses  sujets, 
mais  a  la  culture  de  son  sol  et  a  la  pratique  honn£te  de  son 
industrie  ?  .  L’exp^rience  de  toutes  les  guerres  qui  ont  ravage 
le  monde  dans  le  cours  de  ce  si&cle  n’a-t-elle  pas  attests  qu’elles 
ont  coute  aux  vainqueurs  plus  qu’elles  ne  leur  ont  rapports  ? 
Comment  done  s’expliquer  que  des  etres  pourvus  de  raison 
et  sachant  compter  continuent  &  pratiquer  une  industrie  qui 
travaille  a  perte  ?  Ce  serait  1&  sans  doute  un  phdnomene  inex¬ 
plicable,  et  une  aberration  du  ressort  des  m^decins  alienistes 
si  les  producteurs  —  chefs  d’industrie,  capitalistes  et  ouvriers 
qui  paient  les  frais  de  toutes  les  guerres,  poss^daient  dans 
le  gouvernement  des  nations  une  influence  pr^ponderante. 
Mais,  en  depit  des  revolutions,  des  unifications  et  des  con¬ 
stitutions  politiques  qui  ont  eu  pour  objet  d’affranchir  les 
nations  de  l’exploitation  d’une  caste  nationale  ou  etrang&re, 
la  forme  de  leurs  gouvernements  seule  a  change,  le  fond  est 
demeure  le  m$me.  Les  intents  particuliers  n’ont  pas  cesse 
de  se  coaliser  pour  faire  la  loi  k  l’inter^t  general.  Et  dans 
toute  l’Europe  les  intents  engages  dans  la  conservation  de 
l’e tat  de  guerre,  intents  militaires  et  politiques,  sont  de- 
meures  preponderants.  Les  armees  et  les  fonctions  pub- 
liques  qui  etaient  sous  l’ancien  regime  l’unique  debouche  de  la 
classe  gouvernante,  n’ont  pas  cesse  d’etre  considers  comme 
superieures  aux  autres  emplois  de  l’activite  humaine.  Elies 
attirent  encore  de  preference  les  rejetons  de  l’ancienne  classe 
dominante  avec  les  parvenus  de  la  nouvelle,  et  constituent  un 
puissant  faisceau  d’interets,  aussi  bien  dans  la  plupart  des 
republiques  que  dans  les  monarchies.  Or,  la  guerre  etant 


600 


ECONOMIC  HISTORY. 


aujourd’hui  comme  elle  l’ytait  jadis  une  source  de  profits  et 
d’honneurs  pour  les  militaires  professionnels,  il  est  naturel 
qu’ils  y  poussent.  “  Connaissez-vous  bien  mon  arm^e,  disait 
Napoleon  ?  C’est  un  chancre  qui  me  d^vorerait,  si  je  ne  lui 
donnais  de  la  pature  1 !  ” 

*  _ 

Cette  pature,  les  d^tenteurs  du  pouvoir,  chefs  d’Etats  et 
politicians,  sont  d’autant  plus  disposes  &  la  lui  donner  que  la 
guerre  fait  taire  les  oppositions  et  ajourne,  sauf  a  les  aggraver 
plus  tard,  les  difficultes  int^rieures.  On  s’explique  done  que 
la  guerre  ait  surv^cu  aux  pdrils  qui  mena9aient  la  civilisation, 
et  il  y  a  grande  apparence  qu’elle  leur  survivra  aussi  long- 
temps  .que  cette  industrie  destructive  disposera  d’une  influ¬ 
ence  politique  sup^rieure  a  celle  des  industries  productives 
qui  en  supportent  les  frais  et  les  dommages.  On  s’explique 
aussi  que  Faccroissement  extraordinaire  de  la  productivity  de 
l’industrie,  en  augmentant  la  richesse  et  la  puissance  des 
nations,  ait  d^terminy  un  dyveloppement  correspondant  des 
appareils  de  guerre.  Du  moment  ou  le  risque  de  guerre  sub- 
siste  et  peut  dchoir  du  jour  au  lendemain,  sous  la  pression 
d’intyrets  qui  demandent  une  pature,  il  faut  bien  s’armer 
contre  ce  risque,  opposer  a  l’ennemi  une  puissance  destructive 
au  moins  dgale  a  la  sienne  et,  par  consyquent,  l’augmenter 
dans  la  proportion  des  forces  et  des  ressources  que  cryent  et 
dyveloppent  les  progrks  de  l’industrie.  Cette  proportion,  le 
rygime  de  la  paix  armye  Fa  certainement  atteinte  aujourd’hui 
en  Europe,  s’il  ne  1’a  point  dypassye. 

Ces  ynormes  effectifs  que  nycessite  le  rygime  de  la  paix 
armye  ne  peuvent,  d’ailleurs,  sous  peine  de  se  rouiller,  de- 
meurer  toujours  inactifs.  Un  chomage  trop  prolongy  dytd- 
riore  les  ateliers  de  la  destruction  aussi  bien  que  ceux  de  la 
production.  La  guerre  est  nycessaire  a  la  santy  des  armyes. 
Aussi  enseigne-t-on  dans  les  ycoles  militaires  que  chaque  gyn- 
dration  doit  avoir  la  sienne.  Mais  les  dettes  publiques  se  sont 
tellement  alourdies  et  le  prix  de  revient  d’une  guerre  entre 
des  nations  ygales  en  puissance  s’est  tellement  accru,  qu’il  est 
devenu  de  plus  en  plus  difficile  de  donner  satisfaction  aux 
professionnels  de  Fart.  Qu’a-t-on  fait  ?  On  a  remplacy,  dans 

1  Henri  Welschlinger,  Journal  des  Debats ,  14  juillet  1900. 


LE  XIXe  SIECLE. 


601 


ce  dernier  quart  de  sidcle,  les  guerres,  ddsormais  trop  cou- 
teuses  entre  les  nations  civilisdes,  par  des  guerres  de  conquete, 
d’exploitation  ou  de  rapine,  en  dehors  du  domaine  de  la  civ¬ 
ilisation.  Les  gouvernements  europdens  se  sont  partagd 
l’Afrique  et  ils  mettent  aujourd’hui  la  Chine  au  pillage,  sous 
prdtexte  d’ouvrir  de  nouveaux  ddbouchds  a  l’industrie  et  de 
faire  participer  les  negres,  sans  oublier  les  Chinois,  aux  bien- 
faits  de  notre  civilisation.  Mais  il  suffit  d’additionner  et  de 
comparer  les  frais  de  conqugte  et  de  conservation  des  coLonies, 
des  protectorats  et  des  zones  d’influence  avec  les  profits  qu’en 
tirent  l’industrie  et  le  commerce,  pour  §tre  ddifid  sur  la  valeur 
de  ce  prdtexte.  La  conqudte,  rassujettissement,  l’exploitation 
fiscale  et  protectionniste  n’ont  pas  la  vertu  d’dtendre  les  dd- 
bouchds  de  l’industrie  et  du  commerce.  Ils  contribuent  plutot 
a  les  resserrer  en  augmentant  les  charges  quo  les  budgets  de 
la  guerre,  de  la  marine  et  des  colonies  font  peser  sur  toutes 
les  branches  de  la  production.  Quant  a  la  civilisation,  est-ce 
bien  par  le  massacre  et  le  pillage  qu’on  peut  en  faire  apprdcier 
les  bienfaits  aux  “  Barbares  ”  ? 

Aux  frais  d’armement  hors  de  toute  proportion  avec  les 
besoins  reels  de  sdcurite  des  peuples  civilises,  aux  guerres 
engagdes  pour  donner  satisfaction  a  des  intdrets  de  caste,  de 
parti  ou  de  dynastie,  il  faut  ajouter,  dans  la  colonne  du  passif 
du  xixe  sidcle,  une  augmentation  continue  du  prix  des  ser¬ 
vices  sur  lesquels  les  gouvernements  font  main  basse  aux  dd- 
pens  de  l’activitd  privde,  et  les  frais  d’un  systdme  de  prdtendue 
protection  de  l’industrie  qui  ne  rdtribue  aucun  service. 

Les  rdvolutions  et  les  rdformes  politiques  qui  ont  eu  pour 
objet  d’enlever  aux  oligarchies  nobiliares  et  cldricales  de 
l’ancien  rdgime  le  monopole  du  gouvernement  des  nations  n’ont 
eu,  en  fait,  d’autres  rdsultats  que  d’dtendre  successivement  ce 
monopole,  et  de  confdrer  ainsi  a  une  classe  de  plus  en  plus 
nombreuse  le  pouvoir  et  l’influence  naturellement  attachds  & 
la  possession  de  l’Etat.  Les  fonctions  qui  servaient  de  dd- 
bouchds  a  l’ancienne  classe  gouvernante  n’ont  plus  suffi  &  la 
nouvelle.  Il  a  fallu  les  multiplier  pour  satisfaire  a  l’accroisse- 
ment  de  la  demande.  L’extension  des  attributions  de  l’Etat 
est  devenue  par  consdquent  une  ndcessitd  politique.  En  vain, 


602 


ECONOMIC  HISTORY. 


les  dconomistes,  gens  naifs  et  incapables  d’apprdcier  ce  genre 
de  ndcessitd,  se  sont  dvertuds  &  ddmontrer  que  les  produits  et 
les  services  de  l’Etat  reviennent  plus  cher  aux  consommateurs 
que  ceux  de  l’industrie  privde ;  que  les  fonctionnaires  de 
l’Etat  sont  plus  raal  recrutds,  moins  laborieux  et  moins  servi- 
ables  que  ceux  des  entreprises  par-ticulieres,  rien  n’y  a  fait. 
Sous  la  pression  irresistible  des  influences  dlectorales  et  autres, 
l’Etat  a  dtendu  ses  attributions  et  multiplid  ses  fonctionnaires, 
et  les  petits  Etats  municipaux,  ddpartementaux  ou  provin- 
ciaux  ont  suivi  partout  Pexemple  du  grand.  Pour  ne  citer  que 
la  France,  le  n ombre  des  fonctionnaires  publics  de  tout  ordre 
s’y  est  elevd,  dans  le  cours  du  sidcle,  de  60.000  a  400.000,  et 
l’dtatisme  va,  de  m§me,  se  propageant  dans  les  autres  pays, 
sans  excepter  l’Angleterre,  a  mesure  que  l’extension  de  la 
classe  gouvernante  augmente  la  demande  des  places. 

Aux  benefices  provenant  du  monopole  des  fonctions  pub- 
liques  se  joignaient,  sous  l’ancien  regime,  ceux  des  privileges 
en  matiere  d’impots  et  des  redevances  fdodales.  Ces  privi¬ 
leges  et  ces  redevances,  apres  avoir  dtd  abolis  sous  leurs 
anciennes  formes,  ont  peu  a  pcu  reparu,  sous  d’autres  formes 
adaptdes  aux  intdrets  dominants.  Les  impots  indirects  et  les 
monopoles  qui  pesent  principalement  sur  les  couches  politique- 
ment  les  moins  influentes  de  la  population,  et  qui  ne  ligur- 
aient  en  France  que  pour  un  tiers  dans  le  budget  des  recettes, 
ont  atteint  successivement  la  proportion  des  deux  tiers.  Les 
droits  de  douane  que  le  traits  de  1786  avait  abaissds,  sous 
l’influence  des  doctrines  libdrales,  propagdes  en  Angleterre 
par  l’dcole  d’Adam  Smith,  en  France  par  celle  de  Quesnay  et 
de  Turgot,  ont  dtd  relevds,  d’abord  h  titre  d’instruments  de 
guerre,  ensuite  d’instruments  de  protection  et  mis  au  service 
des  interdts  politiquement  influents.  Ils  ont  remplacd,  pour 
les  grands  propridtaires  terriens,  les  redevances  fdodales  et 
ont  dtd  dtendus  aux  ddtenteurs  de  la  propridtd  industrielle 
coalisds  avec  eux. 

Cette  coalition  s’est  rompue  en  Angleterre,  et  les  intdrSts 
agrariens  rdduits  &  leurs  propres  forces  ont  succombd  sous 
Peffort  de  la  Ligue  contre  les  lois  cdrdales.  La  multitude, 
exondrde  du  tribut  qu’elle  payait  aux  intdrets  privildgids,  a  pu 


LE  XIX ’«  SIfiCLE. 


603 


augmenter  sa  consommation  des  articles  de  n^cessitd  et  de  con- 
fort,  tout  en  accroissant  son  6pargne,  et  Findustrie  britannique, 
encourag^e  par  le  d^veloppement  de  la  consommation  et  stim¬ 
uli  par  la  concurrence,  a  pris  un  essor  merveilleux.1 

L’exemple  de  l’Angleterre  a  £t6  suivi  d’abord  par  les  autres 
nations  et  on  a  pu  croire,  un  moment,  qu’une  nouvelle  £re  de 
liberty  et  de  paix  allait  s’ouvrir  pour  le  monde.  Mais  l’illu- 
sion  a  6t£  courte.  Les  intdrets  militaristes  et  protectionnistes 
n’ont  pas  tard6  a  reprendre  le  dessus.  La  guerre  de  la  Seces¬ 
sion  am^ricaine,  en  donnant  la  victoire  aux  Etats  protection¬ 
nistes,  leur  a  permis  delever  le  tarif  au  gr6  de  leurs  app^tits. 
La  guerre  franco-allemande,  en  provoquant,  avec  une  recru- 

1  Nous  empruntons  k  notre  jeune  confrere  YIndividualiste,  le  tableau  suivant 
des  resultats  de  la  politique  du  libre-echange  en  Angleterre : 

ANNEES 


1859-60 

1869-70 

1879-80 

1889-90 

1899-1900 

Millions 

Millions 

Millions 

Millions 

Millions 

de  £ 

de  £ 

de  £ 

de  £ 

de  £ 

Revenu  national . 

70 

74 

79 

89 

120 

Dette  nationale . 

828 

800 

777 

691 

639 

Propriete  imposee,  impot  sur  le 

revenu,  valeur  annuelle  en  gros. 

335 

445 

577 

669 

759  • 

Placements  k  la  caisse  d’epargne  .  . 

39 

51 

76 

108 

182 

lbs. 

lbs. 

lbs. 

lbs. 

lbs. 

Consommation  de  the  par  habitant. 

2.7 

3.6 

4.7 

5.0 

5.9 

Consommation  de  sucre  par  habitant. 

35 

53 

66 

77 

91 

MOYENNES  ANNUELLES 

1854-59 

1860-69 

1870-79 

1880-89 

1890-99 

Millions 

Millions 

Millions 

Millions 

Millions 

de  £ 

de  £ 

de  £ 

de  £ 

de  £ 

Importations  nettes  (importations, 

moins  les  reexportations)  .  .  . 

144 

216 

305 

331 

375 

Exportations  (de  produits  anglais 

seulement) . 

113 

160 

218 

230 

237 

Par 

Par 

Par 

Par 

Par 

millions 

millions 

millione 

millions  millions 

de 

de 

de 

de 

de 

tonnes 

tonnes 

tonnes 

tonnes 

tonnes 

Navigation  entree  dans  les  ports 

anglais  (moins  le  cabotage)  .  .  . 

10.000 

14.300 

23.700  31.600  41.000 

Bateaux  construits  par  des  pro- 

prietaires  anglais . 

230 

314 

398 

500 

605 

Fonte  produite . 

3.460 

2.520 

6.390 

7.900 

7.950 

Coton  brut  travaille  dans  les  manu- 

factures . 

385 

358 

556 

657 

696 

Or  accumuld :  De  1858  k  1899  le  total  des  importations  nettes  d’or  s’est  elevd 
k  £  148.000.000  ou  3.700.000.000  de  francs. 

1  livre  sterling  ou  £  =  25  francs. 


604 


ECONOMIC  HISTORY. 


descence  du  militarisme,  l’accroissement  gdndral  des  budgets 
de  la  guerre,  a  obligd  les  gouvernements  a  demander  a  leurs 
parlements  un  complement  de  ressources.  La  coalition  pro- 
tectionniste  a  trouvd  cette  occasion  favorable  pour  se  re¬ 
former  et  mettre  a  prix  son  concours. 

Les  tarifs  de  douane  ont  dtd  relevds  dans  le  double  intdret 
de  la  fiscalitd  et  de  la  protection.  En  Allemagne,  en  Italie, 
en  France  les  droits  sur  les  articles  de  premiere  ndcessitd,  le 
pain  et  la  viande,  ont  dtd  exhausses  de  manure  a  en  dlever 
les  prix  d’un  tiers  ou  de  moitid,  dans  l’intdr$t  des  proprid- 
taircs  fonciers,  tandis  que  d’autres  exhaussements  de  tarifs 
sur  les  matdriaux  des  vetements,  de  l’ameublement,  des  trans¬ 
ports,  fournissaient,  avec  l’adjonction  d’un  systeme  de  primes, 
la  part  de  leurs  allids,  les  propridtaires  d’industries,  aux  dd- 
pens  de  la  gdndralitd  des  consommateurs  et  des  contribuables. 
Aux  impots  que  ceux-ci  doivent  h  l’Etat  s'ajoutent  les  impots 
qu’ils  ne  doivent  pas,  et  qui  ne  sont,  en  rdalitd,  autre  chose  que 
les  vieilles  redevances  fdodales  transformdes  et  modernisdes. 

On  s’explique  done  que  l’augmentation  extraordinaire  de  la 
richesse,  ddterminde  par  une  merveilleuse  efflorescence  de 
progres,  n’ait  pas  accru  d’une  maniere  dquivalente  le  bien- 
etre  des  peuples  civilisds.  L’incapacitd  et  les  vices  des  gou¬ 
vernements,  le  militarisme,  l’dtatisme,  le  protectionnisme  ont 
ddvord  une  forte  part  de  cette  plus-value  de  l’industrie.  L’ig- 
norance  et  l’insuffisance  morale  des  individus  dmancipds  de 
l’ondreuse  tutelle  de  la  servitude,  mais  encore  incapables  de 
supporter  tout  le  poids  de  la  responsabilitd  attachde  a  la  lib¬ 
erty,  en  ont  ddtruit  ou  stdrilisd  une  autre  part.  II  faut  bien 
le  dire.  La  multitude  qui  vivait  au  jour  le  jour  du  produit  de 
son  travail  ne  possddait  ni  la  capacitd,  ni  les  ressources  ndees- 
saires  pour  mettre  en  pleine  valeur  son  capital  de  forces 
productives.  Comme  le  constatait  Adam  Smith,  l’ouvrier 
ddpourvu  d’avances  se  trouvait  vis-a-vis  de  l’employeur  dans 
une  situation  indgale,  qu’aggravait  la  ddfense  de  remddier  h 
cette  indgalitd  par  l’association.  D’un  autre  cotd,  il  avait 
&  faire  le  difficile  apprentissage  de  la  libertd,  il  devait  rdgler 
et  contenir  ses  besoins  actuels  en  prdvision  des  ndcessitds 
futures,  pourvoir  aux  accidents  et  aux  chomages,  remplir 


LE  XIXe  SlECLE. 


605 


toutes  ses  obligations  envers  lui-meme  et  envers  les  etres  dont 
il  etait  responsable.  Doit-on  s’etonner  s’il  n’a  point  suffi  a 
cette  tache,  si,  avec  un  salaire  debattu  dans  des  conditions 
in^gales  et  diminue  par  les  cliarges  des  impots  qu’il  devait 
et  celles  des  impots  qu’il  ne  devait  pas,  il  a  trop  souvent 
succombe  sous  le  faix,  et  si,  en  meme  temps  que  croissait 
la  richesse,  se  propageaient  la  misSe  et  la  degradation 
morale  ? 

Ces  maux  qui  ont  accompagnd  la  transformation  de  l’indus- 
trie  et  l’emancipation  des  classes  ouvrieres,  les  dconomistes  se 
sont  appliques  a  les  rattacher  a  leurs  vdritables  causes,  et  a 
rdclamer  les  reformes  propres  a  y  rem^dier.  Mais  ces  rd- 
formes  se  heurtent  a  des  intdrets  puissants  et  intraitables,  et 
elles  n’ont  point  d’ailleurs  une  efficacite  immediate  et  radicale. 
Les  socialistes  ont  eu  plus  de  succes  en  attribuant  en  bloc 
les  soufifrances  de  la  multitude  a  un  pouvoir  mysterieux  et 
redoutable  qu’ils  ont  d^signd  et  stigmatise  sous  le  nom  de 
tyrannie  du  capital.  Cette  tyrannie,  ils  convient  les  masses 
ouvrieres  a  la  renverser,  en  employant  le  procddd  expeditif 
d’une  revolution  sociale.  La  revolution  faite  les  socialistes 
autoritaires,  collectivistes  ou  communistes,  se  proposent  de 
charger  l’Etat  de  reorganiser  la  societe ;  les  socialistes  an- 
archistes,  au  contraire,  veulent  abolir  l’Etat,  mais  les  uns  et 
les  autres  s’accordent  sur  un  point  essentiel :  la  confiscation 
du  capital. 

Et  telle  est  la  solution  de  la  question  sociale  qui  tient  le 
record  de  la  popularite  a  l’aurore  du  xxe  si£cle. 

hi 

Le  xixe  siecle  legue  a  son  successeur  un  heritage  de  milliar- 
daire.  Aucun  de  ses  predecesseurs  n’a  autant  grossi  la  for¬ 
tune  qu’il  avait  regue.  Mais  s’il  a  agrandi  son  domaine  et 
augmente  dans  des  proportions  auparavant  inconnues  la 
somme  de  ses  richesses  immobili&res  et  de  ses  valeurs  mobi¬ 
lises,  il  laisse  cet  enorme  heritage  fortement  greve  de  dettes. 
Il  l£gue  aussi  a  ses  heritiers,  sans  parlor  des  vices  communs 
a  tous  les  sidcles,  et  dont  il  ne  s’est  guere  applique  a  se  cor- 


606 


ECONOMIC  HISTORY. 


riger,  des  habitudes  enracin^es  et  aggrav^es  de  dissipation  et 
de  gaspillage. 

Le  xxe  siecle  continuera  sans  aucun  doute  a  accroitre  la 
productivity  de  l’industrie  et  a  multiplier  la  richesse.  Ses 
savants,  ses  inventeurs,  ses  industriels,  ses  capitalistes,  ses 
ouvriers  ne  chomeront  point,  ils  travailleront  sans  relache  h 
augmenter  la  soinme  des  matyriaux  de  la  civilisation  et  da 
bien-etre.  Mais  il  est  malheureusement  permis  de  craindre 
que  P  oeuvre  de  ces  artisans  laborieux  de  la  production  ne  con¬ 
tinue  aussi  a  etre  contrar^e,  par  l’aveugle  ygoisme  des  in- 
tyrets,  que  ses  fruits  ne  soient,  comme  d’habitude,  dytournys 
de  leur  destination  utile,  et  employys  a  des  fins  nuisibles. 

Pendant  que  la  science  et  l’industrie  multiplient  la  richesse, 
le  militarisme,  l’ytatisme  et  le  protectionnisme,  en  attendant 
le  socialisme,  s’associent  pour  la  dytruire,  et  en  ypuiser  la 
source.  Les  recettes  que  le  travail  annuel  des  nations  fournit 
au  budget  des  gouvernements  ne  suffisent  plus  a  leurs  dy« 
penses.  C’est  en  gryvant  le  travail  des  gynyrations  futures 
qu’ils  rytablissent  Pequilibre.  Les  dettes  publiques  de  PEurope 
out  doubly  dans  la  seconde  moitiy  du  siecle.  En  suivant  la 
meme  progression,  elles  atteindront  pour  le  moins  400  mil¬ 
liards  en  Pan  2000.  Quels  que  soient  les  progres  de  la 
production,  ce  fardeau  ne  dypassera-t-il  pas  les  forces  des 
producteurs  ?  Souhaitons  done  —  et  c’est  le  veeu  le  plus  utile 
que  nous  puissions  adresser  a  notre  descendance  — ,  que  le 
xxe  siecle  n’excelle  pas  seulement,  comme  son  devancier,* 
a  produire  de  la  richesse,  mais  qu’il  apprenne  &  la  mieux 
employer. 


APPENDICES. 


i. 

LEADING  SECTIONS  FROM  THE  ENGLISH  NAVIGA¬ 
TION  ACTS. 

Act  of  1660,  12  Car.  II.,  c.  18. 

An  Act  for  the  Encouraging  and  Increasing  of  Shipping  and 

Navigation. 

For  the  Increase  of  Shipping  and  Encouragement  of  the  Naviga¬ 
tion  of  this  Nation,  wherein,  under  the  good  Providence  and  Pro¬ 
tection  of  God,  the  Wealth,  Safety,  and  Strength  of  this  Kingdom 
is  so  much  concerned;  (2)  Be  it  enacted  by  the  King’s  most  Ex¬ 
cellent  Majesty,  and  by  the  Lords  and  Commons  in  this  present 
Parliament  assembled,  and  by  the  Authority  thereof,  That  from 
and  after  the  first  day  of  December ,  one  thousand  six  hundred  and 
sixty,  and  from  thenceforward,  no  Goods  or  Commodities  whatso¬ 
ever  shall  be  imported  into  or  exported  out  of  ^ny  Lands,  Islands, 
Plantations,  or  Territories  to  his  Majesty  belonging  or  in  his  Pos¬ 
session,  or  which  may  hereafter  belong  unto  or  be  in  the  Possession 
of  his  Majesty,  his  Heirs  and  Successors,  in  Asia,  Africa,  or  Amer¬ 
ica,  in  any  other  Ship  or  Ships,  Vessel  or  Vessels  whatsoever,  but 
in  such  Ships  or  Vessels  as  do  truly  and  without  Fraud  belong  only 
to  the  People  of  England  or  Ireland,  Dominion  of  Wales,  or  Town 
of  Berwick  upon  Tweed,  or  are  of  the  Built  of  and  belonging  to 
any  the  said  Lands,  Islands,  Plantations,  or  Territories  as  the  Pro¬ 
prietors  and  right  Owners  thereof,  and  whereof  the  Master  and 
three-fourths  of  the  Mariners  at  least  are  English;  .  .  . 

III.  And  it  is  further  enacted  by  the  Authority  aforesaid, 
That  no  Goods  or  Commodities  whatsoever,  of  the  Growth,  Pro- 


608 


ECONOMIC  HISTORY. 


duction  or  Manufacture  of  Africa ,  Asia,  or  America,  or  of  any 
Part  thereof,  or  which  are  described  or  laid  down  in  the  usual 
Maps  $r  Cards  of  those  Places,  he  imported  into  England,  Ireland, 
or  Wales,  Islands  of  Guernsey  and  Jersey,  or  Town  of  Berwick 
upon  Tweed,  in  other  Ship  or  Ships,  Vessel  or  Vessels  whatsoever, 
hut  in  such  as  do  truly  and  without  Praud  belong  only  to  the 
People  of  England  or  Ireland,  Dominion  of  Wales,  or  Town  of 
Berwick  upon  Tweed,  or  of  the  Lands,  Islands,  Plantations,  or 
Territories  in  Asia,  Africa,  or  America,  to  his  Majesty  belonging, 
as  the  Proprietors  and  right  Owners  thereof,  and  whereof  the  Mas¬ 
ter,  and  three-fourths  at  least  of  the  Mariners  are  English  ;  .  .  . 

IV.  And  it  is  further  enacted  by  the  Authority  aforesaid,  That 
no  Goods  or  Commodities  that  are  of  Poreign  Growth,  Production, 
or  Manufacture,  and  which  are  to  be  brought  into  England,  Ireland , 
Wales,  the  Islands  of  Guernsey  and  Jersey,  or  Town  of  Berwick 
upon  Ticeed,  in  English- built  Shipping,  or  other  Shipping  belong¬ 
ing  to  some  of  the  aforesaid  Places,  and  navigated  by  English  Mari¬ 
ners,  as  aforesaid,  shall  be  shipped  or  brought  from  any  other  Place 
or  Places,  Country  or  Countries,  but  only  from  those  of  the  said 
Growth,  Production,  or  Manufacture,  or  from  those  Ports  where 
the  said  Goods  and  Commodities  can  only,  or  are,  or  usually  have 
been,  first  shipped  for  Transportation,  and  from  none  other  Place 
or  Countries;  .  .  . 

VIII.  And  it  is  further  enacted  by  the  Authority  aforesaid, 
That  no  Goods  or  Commodities  of  the  Growth,  Production,  or 
Manufacture  of  Muscovy,  or  of  any  the  Countries,  Dominions,  or 
Territories  to  the  Great  Duke  or  Emperor  of  Muscovy  or  Russia 
belonging;  as  also  that  no  Sort  of  Masts,  Timber,  or  Boards,  no 
foreign  Salt,  Pitch,  Tar,  Rosin,  Hemp  or  Plax,  Raisins,  Pigs, 
Prunes,  Olive-Oils,  no  Sorts  of  Corn  or  Grain,  Pot -Ashes,  Wines, 
Vinegar,  or  Spirits  called  Aqua-Vitae,  or  Brandy-Wine,  shall 
from  and  after  the  first  day  of  April,  which  shall  be  in  the  Year  of 
our  Lord  one  thousand  six  hundred  sixty-one,  be  imported  into 
England,  Ireland,  Wales,  or  Town  of  Berwick  upon  Ticeed,  in  any 
Ship  or  Ships,  Vessel  or  Vessels  whatsoever,  but  in  such  as  do 
truly  and  without  fraud  belong  to  the  People  thereof,  or  some  of 
them,  as  the  true  Owners  and  Proprietors  thereof,  and  whereof  the 
Master  and  three-fourths  of  the  Mariners  at  least  are  English : 
And  that  no  Currans  nor  Commodities  of  the  Growth,  Production, 
or  Manufacture  of  any  the  Countries,  Islands,  Dominions,  or  Ter¬ 
ritories  to  the  Ottoman  or  Turkish  Empire  belonging,  shall  from 


APPENDIX  I. 


609 


and  after  the  first  day  of  September,  which  shall  be  in  the  year  of 
onr  Lord  one  thousand  six  hundred  sixty-one,  be  imported  into  any 
the  afore-mentioned  places  in  any  Ship  or  Vessel,  but  which  is  of 
English  built,  and  navigated,  as  aforesaid,  and  in  no  other,  except 
only  such  foreign  Ships  and  Vessels  as  are  of  the  Built  of  that 
Country  or  Place  of  which  the  said  Goods  are  the  Growth,  Produc¬ 
tion,  or  Manufacture  respectively,  or  of  such  Port  where  the  said 
Goods  can  only  be,  or  most  usually  are,  first  shipped  for  Transpor¬ 
tation,  and  whereof  the  Master  and  three-fourths  of  the  Mariners 
at  least  are  of  the  said  Country  or  Place;  .  .  . 

XVIII.  And  it  is  further  enacted  by  the  Authority  afore¬ 
said,  That  from  and  after  the  first  Day  of  April,  which  shall  be 
in  the  Year  of  our  Lord  one  thousand  six  hundred  sixty-one,  no 
Sugars,  Tobacco,  Cotton-Wool,  Indigoes,  Ginger,  Fustick,  or 
other  dying  Wood,  of  the  Growth,  Production,  or  Manufacture 
of  any  English  Plantations  in  America,  Asia,  or  Africa,  shall  be 
shipped,  carried,  conveyed,  or  transported  from  any  of  the  said 
English  Plantations  to  any  Land,  Island,  Territory,  Dominion, 
Port  or  Place  whatsoever,  other  than  to  such  other  English  Planta¬ 
tions  as  do  belong  to  his  Majesty,  his  Heirs  and  Successors,  or 
to  the  kingdom  of  England  or  Ireland,  or  Principality  of 
Wales,  or  Town  of  Berwick  upon  Tweed,  there  to  be  laid  on 
shore;  .  .  . 

Act  of  1662,  14  Car.  II.,  c.  11. 

XXIII.  And  whereas  some  Doubts  and  Disputes  have  arisen 
concerning  the  said  late  Act,  For  increasing  and  encouraging  of 
Shipping  and  Navigation,  about  some  of  the  Goods  therein  pro¬ 
hibited  to  be  brought  from  Holland  and  the  Parts  and  Ports  there- 
abouts;  (2)  Be  it  enacted  and  declared,  that  no  Sort  of  Wines, 
(other  than  Hhenish)  no  Sort  of  Spicery,  Grocery,  Tobacco,  Pot- 
Ashes,  Pitch,  Tar,  Salt,  Bozin,  Deal-Boards,  Fir,  Timber,  or 
Olive-Oil,  shall  be  imported  into  England,  Wales,  or  Berwick, 
from  the  Netherlands  or  Germany,  upon  any  Pretence  whatsoever, 
in  any  Sort  of  Ships  or  Vessels  whatsoever;  .  .  . 

Act  of  1663,  15  Car.  II.,  c.  7. 

V.  And  in  regard  his  Majesty’s  Plantations  beyond  the  Seas 
are  inhabited  and  peopled  by  his  subjects  of  this  his  Kingdom  of 
England,  for  the  maintaining  a  greater  Correspondence  and  Kind¬ 
ness  between  them,  and  keeping  them  in  a  further  Dependance 

39 


610 


ECONOMIC  HISTORY. 


upon  it,  and  rendring  them  yet  more  beneficial  and  advantageous 
unto  it  in  the  further  Imployment  and  Increase  of  English  Ship¬ 
ping  and  Seamen,  Vent  of  English  Woollen  and  other  Manufac¬ 
tures  and  Commodities,  rendring  the  Navigation  to  and  from  the 
same  more  safe  and  cheap,  and  making  this  Kingdom  a  Staple,  not 
only  of  the  Commodities  of  those  plantations,  hut  also  of  the 
Commodities  of  other  Countries  and  Places  for  the  Supplying  of 
them;  and  it  being  the  Usage  of  other  Nations  to  keep  their  Plan¬ 
tations  Trade  to  themselves : 

VI.  Be  it  enacted,  and  it  is  hereby  enacted,  That  from  and 
after  the  five  and  twentieth  day  of  March,  one  thousand  six  hun¬ 
dred  sixty-four,  no  Commodity  of  the  Growth,  Production,  or  Man¬ 
ufacture  of  Europe ,  shall  be  imported  into  any  Land,  Island, 
Plantation,  Colony,  Territory,  or  Place  to  his  Majesty  belonging, 
or  which  shall  hereafter  belong  unto  or  be  in  the  Possession  of  his 
Majesty,  his  Heirs  and  Successors,  in  Asia,  Africa,  or  America , 
( Tangier  only  excepted)  but  what  shall  be  bona-fide,  and  without 
Fraud,  laden  and  shipped  in  England,  Wales,  or  the  Town  of  Ber * 
wick  upon  Tweed,  and  in  English  built  Shipping,  or  which  were 
bona-fide  bought  before  the  first  day  of  October  one  thousand  six 
hundred  sixty  and  two,  and  had  such  Certificate  thereof  as  is  di¬ 
rected  in  one  Act  passed  the  last  Sessions  of  this  Present  Parlia¬ 
ment,  intituled,  An  Act  for  preventing  Frauds,  and  Regulating 
Abuses  in  his  Majesty's  Customs;  and  whereof  the  Master  and 
three  Fourths  of  the  Mariners  at  least  are  English,  and  which  shall 
be  carried  directly  thence  to  the  said  Lands,  Islands,  Plantations, 
Colonies,  Territories,  or  Places,  and  from  no  other  Place  or 
Places  whatsoever;  any  Law,  Statute,  or  Usage  to  the  contrary 
notwithstanding;  .  .  . 

See  English  Statutes  at  Large. 


APPENDIX  II. 


611 


II. 

IMPORTANT  SECTIONS  OF  AMERICAN  NAVIGATION 

ACTS. 

Act  of  July  20,  1789. 

Chap.  III. —  An  Act  imposing  Duties  on  Tonnage. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled ,  That  the  fol¬ 
lowing  duties  shall  he,  and  are  imposed  on  all  ships  or  vessels  en¬ 
tered  in  the  United  States,  that  is  to  say: 

On  all  ships  or  vessels  built  within  the  said  States,  and  belong¬ 
ing  wholly  to  a  citizen  or  citizens  thereof,  or  not  built  within  the 
said  States,  but  on  the  twenty-ninth  day  of  May,  one  thousand 
seven  hundred  and  eighty-nine,  belonging,  and  during  the  time 
such  vessel  or  vessels  shall  continue  to  belong  wholly  to  a  citizen 
or  citizens  thereof,  at  the  rate  of  six  cents  per  ton.  On  all  ships  or 
vessels  hereafter  built  in  the  United  States,  belonging  wholly, 
or  in  part,  to  subjects  of  foreign  powers,  at  the  rate  of  thirty  cents 
per  ton.  On  all  other  ships  or  vessels,  at  the  rate  of  fifty  cents 
per  ton. 

Sec.  3.  And  be  it  further  enacted ,  That  every  ship  or  vessel  em¬ 
ployed  in  the  transportation  of  any  of  the  produce  or  manufactures 
of  the  United  States,  coastwise  within  the  said  States,  except  such 
ship  or  vessel  be  built  within  the  said  States,  and  belong  to  a  citizen 
or  citizens  thereof,  shall,  on  each  entry,  pay  fifty  cents  per  ton. 

1  U.  S.  Statutes  at  Large,  27. 

Act  of  Dec.  31,  1792. 

Chap.  I.  An  Act  concerning  the  Registering  and  Recording  of 

Ships  or  Vessels. 

Section  1.  Be  it  enacted ,  .  .  .  That  ships  or  vessels  which  shall 
have  been  registered  by  virtue  of  the  act,  intituled  “  An  act  for  regis¬ 
tering  and  clearing  vessels,  regulating  the  coasting  trade  and  for 
other  purposes,  ”  and  those  which  after  the  last  day  of  March  next, 
shall  be  registered,  pursuant  to  this  act,  and  no  other  (except  such 


612 


ECONOMIC  HISTORY. 


as  shall  he  duly  qualified,  according  to  law,  for  carrying  on  the 
coasting  trade  and  fisheries,  or  one  of  them)  shall  he  denominated 
and  deemed  ships  or  vessels  of  the  United  States,  entitled  to  the 
benefits  and  privileges  appertaining  to  such  ships  or  vessels :  Pro¬ 
vided,  That  they  shall  not  continue  to  enjoy  the  same,  longer  than 
they  shall  continue  to  be  wholly  owned,  and  to  be  commanded  by  a 
citizen  or  citizens  of  said  states. 

Sec.  2.  And  be  it  further  enacted,  That  ships  or  vessels  built 
within  the  United  States,  whether  before  or  after,  the  fourth  of 
July,  one  thousand  seven  hundred  and  seventy  six,  and  belonging 
wholly  to  a  citizen  or  citizens  thereof,  or  not  built  within  the  said 
states,  but  on  the  sixteenth  day  of  May,  in  the  year  one  thousand 
seven  hundred  and  eighty  nine,  belonging  and  thenceforth  continu¬ 
ing  to  belong  to  a  citizen  or  citizens  thereof,  and  ships  or  vessels 
which  may  hereafter  be  captured  in  war,  by  such  citizen  or  citizens, 
and  lawfully  condemned  as  prize,  or  which  have  been  or  may  be 
adjudged  to  be  forfeited  for  a  breach  of  the  laws  of  the  United 
States,  being  wholly  owned  by  a  citizen  or  citizens  thereof,  and  no 
other,  may  be  registered  as  hereinafter  directed:  Provided,  That 
no  such  ship  or  vessel  shall  be  entitled  to  be  so  registered,  or  if 
registered,  to  the  benefits  thereof,  if  owned  in  whole,  or  in  part, 
by  any  citizen  of  the  United  States,  who  usually  resides  in  a  for¬ 
eign  country,  during  the  continuance  of  such  residence,  unless 
such  citizen  be  in  the  capacity  of  a  consul  of  the  United  States,  or 
an  agent  for,  and  a  partner  in,  some  house  or  trade  or  co-partner¬ 
ship,  consisting  of  citizens  of  the  said  states  actually  carrying  on 
trade  within  the  said  states. 

1  Statutes  at  Large,  287. 

Act  of  March  1,  1817. 

Chap.  XXXI.  — An  Act  concerning  the  navigation  of  the  United 

States. 

Be  it  enacted,  .  .  .  That  after  the  thirtieth  day  of  September  next 
no  goods,  wares,  or  merchandise,  shall  be  imported  into  the  United 
States  from  any  foreign  port  or  place,  except  in  vessels  of  the 
United  States,  or  in  such  foreign  vessels  as  truly  and  wholly  be¬ 
long  to  the  citizens  or  subjects  of  that  country  of  which  the  goods 
are  the  growth,  production,  or  manufacture;  or  from  which  such 
goods,  wares,  or  merchandise,  can  only  be,  or  most  usually  are, 
first  shipped  for  transportation:  Provided,  nevertheless,  That  this 
regulation  shall  not  extend  to  the  vessels  of  any  foreign  nation 


APPENDIX  II. 


613 


which  has  not  adopted,  and  which  shall  not  adopt,  a  similar 
regulation. 

Sec.  4.  And  be  it  further  enacted ,  That  no  goods,  wares, 
or  merchandise,  shall  be  imported,  under  penalty  of  forfeiture 
thereof,  from  one  port  of  the  United  States  to  another  port  of  the 
United  States,  in  a  vessel  belonging  wholly  or  in  part  to  a  subject 
of  any  foreign  power;  but  this  clause  shall  not  be  construed  to 
prohibit  the  sailing  of  any  foreign  vessel  from  one  to  another  port 
of  the  United  States,  provided  no  goods,  wares,  or  merchandise, 
other  than  those  imported  in  such  vessel  from  some  foreign  port, 
and  which  shall  not  have  been  unladen,  shall  be  carried  from  one 
port  or  place  to  another  in  the  United  States. 

3  Statutes  at  Large,  351. 

Act  of  May  24,  1828. 

Chap.  CXI.  — An  Act  in  addition  to  an  act ,  entitled ,  “An  act  con¬ 
cerning  discriminating  duties  of  tonnage  and  impost 

Be  it  enacted ,  .  .  .  That,  upon  satisfactory  evidence  being  given 
to  the  President  of  the  United  States  by  the  government  of  any  for¬ 
eign  nation  that  no  discriminating  duties  of  tonnage  or  impost  are 
imposed  or  levied  in  the  ports  of  the  said  nation  upon  vessels  wholly 
belonging  to  citizens  of  the  United  States,  or  upon  the  produce, 
manufactures,  or  merchandise  imported  in  the  same  from  the  United 
States,  or  from  any  foreign  country,  the  President  is  hereby  author¬ 
ized  to  issue  his  proclamation,  declaring  that  the  foreign  discrim¬ 
inating  duties  of  tonnage  and  impost  within  the  United  States  are 
and  shall  be  suspended  and  discontinued,  so  far  as  respects  the  ves¬ 
sels  of  the  said  foreign  nation,  and  the  produce,  manufactures,  or 
merchandise  imported  into  the  United  States  in  the  same  from  the 
said  foreign  nation,  or  from  any  other  foreign  country:  the  said 
suspension  to  take  effect  from  the  time  of  such  notification  being 
given  to  the  President  of  the  United  States,  and  to  continue  so 
long  as  the  reciprocal  exemption  of  vessels  belonging  to  citizens  of 
the  United  States,  and  their  cargoes,  as  aforesaid,  shall  be  contin¬ 
ued  and  no  longer. 

4  Statutes  at  Large,  308. 

Act  of  Feb.  10,  1866. 

Chap.  "VTII.  — An  Act  to  regulate  the  Registering  of  Vessels. 

Be  it  enacted ,  .  .  .  That  no  ship  or  vessel,  which  has  been  re¬ 
corded  or  registered  as  an  American  vessel,  pursuant  to  law,  and 


614 


ECONOMIC  HISTORY. 


which  shall  have  been  licensed  or  otherwise  authorized  to  sail  under 
a  foreign  flag,  and  to  have  the  protection  of  any  foreign  govern¬ 
ment  during  the  existence  of  the  rebellion,  shall  be  deemed  or 
registered  as  an  American  vessel,  or  shall  have  the  rights  and  priv¬ 
ileges  of  American  vessels,  except  under  the  provisions  of  an  act 
of  Congress  authorizing  such  registry. 

14  Statutes  at  Large,  3. 

Act  of  June  26,  1884. 

Chap.  CXXI.  — An  Act  to  remove  certain  burdens  on  the  American 
merchant  marine  and  encourage  the  American  foreign  carry¬ 
ing  trade. 

Sec.  14.  [Be  it  f  urther  enacted ,]  That  in  lieu  of  the  tax  on  ton¬ 
nage  of  thirty  cents  per  ton  per  annum  heretofore  imposed  by  law,  a 
duty  of  three  cents  per  ton,  not  to  exceed  in  the  aggregate  fifteen 
cents  per  ton  in  any  one  year,  is  hereby  imposed  at  each  entry  on 
all  vessels  wrhich  shall  be  entered  in  any  port  of  the  United  States 
from  any  foreign  port  or  place  in  North  America,  Central  America, 
the  West  India  Islands,  the  Bahama  Islands,  the  Bermuda  Islands, 
or  the  Sandwich  Islands  or  Newfoundland;  and  a  duty  of  six  cents 
per  ton,  not  to  exceed  thirty  cents  per  ton  per  annum,  is  hereby 
imposed  at  each  entry  upon  all  vessels  which  shall  be  entered  in 
the  United  States  from  any  other  foreign  ports: 

Sec.  17.  When  a  vessel  is  built  in  the  United  States  for  foreign 
account,  wholly  or  partly  of  foreign  materials  on  which  import 
duties  have  been  paid,  there  shall  be  allowed  on  such  vessel,  when 
exported,  a  drawback  equal  in  amount  to  the  duty  paid  on  such 
materials,  to  be  ascertained  under  such  regulations  as  may  be  pre¬ 
scribed  by  the  Secretary  of  the  Treasury.  Ten  per  centum  of  the 
amount  of  such  drawback  shall,  however,  be  retained  for  the  use  of 
the  United  States  by  the  collector  paying  the  same. 

23  Statutes  at  Large,  57. 

Act  of  March  3,  1891. 

Chap.  DXIX.  —  An  Act  to  provide  for  ocean  mail  service  between 

the  United  States  and  foreign  ports,  and  to  promote  commerce. 

Be  it  enacted ,  .  .  .  That  the  Postmaster-General  is  hereby  author¬ 
ized  and  empowered  to  enter  into  contracts  for  a  term  not  less  than 
five  nor  more  than  ten  years  in  duration,  with  American  citizens, 
for  carrying  of  mails  on  American  steamships,  between  ports  of  the 


APPENDIX  II. 


615 


United  States  and  such  ports  in  foreign  countries,  the  Dominion  of 
Canada  excepted,  as  in  his  judgment  will  best  subserve  and  pro¬ 
mote  the  postal  and  commercial  interests  of  the  United  States,  the 
mail  service  on  such  lines  to  he  equitably  distributed  among  the 
Atlantic,  Mexican,  Gulf,  and  Pacific  ports.  .  .  . 

Sec.  3.  That  the  vessels  employed  in  the  mail  service  under  the 
provisions  of  this  act  shall  be  American  built  steamships,  owned 
and  officered  by  American  citizens,  in  conformity  with  the  existing 
laws.  .  .  .  They  shall  be  divided  into  four  classes.  The  first  class 
shall  be  iron  or  steel  screw  steamships,  capable  of  maintaining  a 
speed  of  twenty  knots  an  hour  at  sea  in  ordinary  weather,  and  of  a 
gross  registered  tonnage  of  not  less  than  eight  thousand  tons.  No 
vessel  except  of  said  first  class  shall  be  accepted  for  said  mail  ser¬ 
vice  under  the  provisions  of  this  act  between  the  United  States 
and  Great  Britain.  The  second  class  shall  be  iron  or  steel  steam¬ 
ships,  capable  of  maintaining  a  speed  of  sixteen  knots  an  hour  at 
sea  in  ordinary  weather,  and  of  a  gross  registered  tonnage  of  not 
less  than  five  thousand  tons.  The  third  class  shall  be  iron  or  steel 
steamships,  capable  of  maintaining  a  speed  of  fourteen  knots  an 
hour  at  sea  in  ordinary  weather,  and  of  a  gross  registered  tonnage 
of  not  less  than  two  thousand  five  hundred  tons.  The  fourth  class 
shall  be  iron  or  steel  or  wooden  steamships,  capable  of  maintaining 
a  speed  of  twelve  knots  an  hour  at  sea  in  ordinary  weather,  and  of 
a  gross  registered  tonnage  of  not  less  than  fifteen  hundred  tons. 

Sec.  4.  That  all  steamships  of  the  first,  second,  and  third 
classes  employed  as  above  and  hereafter  built  shall  be  constructed 
with  particular  reference  to  prompt  and  economical  conversion  into 
auxiliary  naval  cruisers,  and  according  to  plans  and  specifications 
to  be  agreed  upon  by  and  between  the  owners  and  the  Secretary  of 
the  Navy,  and  they  shall  be  of  sufficient  strength  and  stability  to 
carry  and  sustain  the  working  and  operation  of  at  least  four  effect¬ 
ive  rifled  cannon  of  a  caliber  of  not  less  than  six  inches,  and  shall 
be  of  the  highest  rating  known  to  maritime  commerce.  .  .  . 

Sec.  5.  That  the  rate  of  compensation  to  be  paid  for  such  ocean 
mail  service  of  the  said  first-class  ships  shall  not  exceed  the  sum  of 
four  dollars  a  mile,  and  for  the  second-class  ships  two  dollars  a 
mile,  by  the  shortest  practicable  route,  for  each  outward  voyage ; 
for  the  third-class  ships  shall  not  exceed  one  dollar  a  mile,  and  for 
the  fourth-class  ships  two-thirds  of  one  dollar  a  mile  for  the  actual 
number  of  miles  required  by  the  Post  Office  Department  to  be 
travelled  on  each  outward  bound  voyage :  .  .  . 

26  Statutes  at  Large,  830. 


616 


ECONOMIC  HISTORY . 


m. 


THE  AMERICAN  CIVIL  WAR. 


COST  OF  THE  WAR. 


From  Report  of  Special  Commissioner  of  the  Revenue  (David 

A.  Wells)  1869,  pp.  iv-vii. 

It  would  seem  desirable  at  tliis  point,  now  that  all  feeling  in  re¬ 
gard  to  the  subject  from  its  bearing  on  political  questions  has 
apparently  passed  away,  to  place  upon  record  the  exact  cost  of  the 
war,  as  nearly  as  the  same  can  be  determined.  With  this  object 
attention  is  asked  to  the  following  exhibit :  — 

The  amount  of  outstanding  national  indebted¬ 
ness  March  7,  1861,  was  $76,455,299.28. 


During  the  four  years  of  war  which  terminated 
in  April,  1865  (April  1,  1861,  to  April  1, 
1865),  the  actual  receipts  of  the  treasury, 
were  as  follows :  — 


From  internal  revenue  .  . 

From  customs . 

From  lands . 

From  direct  tax  .  .  .  . 

From  miscellaneous  sources 


8314,337,317  01 
280,861,618  45 
1,812,083  80 
4,668,259  31 
74,120,413  37 


Total  receipts 


8675,799,691  94 


The  receipts  of  revenue  from  April  1,  1865, 
to  June  30,  1869,  inclusive,  during  which 
period  the  larger  portion  of  the  expenditures 
has  been  directly  in  consequence  of  the  war, 
were  as  follows :  — 


From  internal  revenue  .  . 

From  customs . 

From  lands . 

From  direct  tax  .  .  .  . 

From  miscellaneous  sources 


8967,207,221  41 
729,991,875  97 
7,402,188  28 
9,017,217  30 
194,949,122  13 


Total  receipts 


81,908,567,625  09 


APPENDIX  III . 


617 


The  amount  of  outstanding  indebtedness, 
less  cash  and  sinking  fund  in  treasury, 

June  30,  1869,  was  $2,489,002,480.58. 

Deducting  from  this  the  amount  of  outstand¬ 
ing  indebtedness  at  the  outbreak  of  the 
war  ($76,455,299.28),  we  have,  as  the 
sum  borrowed  for  war  purposes  and  not 
repaid  out  of  the  receipts  above  indicated  $2,412,547,181  30 

Making  the  total  expenditure  (loans 
and  receipts)  in  eight  and  a  quarter 
years  of  war  and  its  effects  .  .  .  $4,996,914,498  33 

Deducting  the  amount  which,  but  for  the 
war,  might  be  taken  as  the  average  ex¬ 
penditure  of  the  government  during  this 


period,  say  $100,000,000  per  annum  .  .  825,000,000  00 

We  shall  have . $4,171,914,498  33 


which  sum  represents  the  cost  of  the  war  to  the  United  States 
government  down  to  June  30,  1869. 

To  this  sum  should  be  added  the  value  of  the  pensions  now  paid 
by  the  government  on  account  of  the  war,  if  the  same  were  capi¬ 
talized.  This  at  eight  years’  purchase  of  the  present  annual  pay¬ 
ment,  would  amount  to  about  two  hundred  millions. 

But  this  aggregate,  however  large,  must  still  further  be  increased 
by  other  items  if  we  would  reach  the  true  cost  of  the  war  to  us  as 
a  people,  the  above  representing  only  the  expenditures  of  the  na¬ 
tional  government. 

These  additional  charges  are  substantially  as  follows :  — 


Increase  of  State  debts,  mainly  on  war 

account .  $123,000,000  00 

County,  city,  and  town  indebtedness  in¬ 
creased  on  account  of  the  war  (estimated)  200,000,000  00 
Expenditures  of  States,  counties,  cities,  and 
towns,  on  account  of  the  war,  not  rep¬ 
resented  by  funded  debt  (estimated)  .  .  600,000,000  00 

Estimated  loss  to  the  loval  States  from  the 

V 

diversion  and  suspension  of  industry,  and 
the  reduction  of  the  American  marine 

and  carrying  trade .  1,200,000,000  00 

Estimated  direct  expenditures  and  loss  of 
property  by  the  Confederate  States  by 
reason  of  the  war .  2,700,000,000  00 


618 


ECONOMIC  HISTORY. 


These  estimates,  which  are  believed  to  he  moderate  and  reason¬ 
able,  show  an  aggregate  destruction  of  wealth,  or  diversion  of  in¬ 
dustry,  which  would  have  produced  wealth  in  the  United  States 
since  1861  approximating  nine  thousand  millions  of  dollars  —  a 
sum  nominally  in  excess  of  the  entire  increase  of  wealth,  as  re¬ 
turned  by  the  census  for  the  whole  country  from  1850  to  1860. 

This,  then,  was  the  cost  of  the  destruction  of  slavery;  the  cost 
of  compromise  ;  the  cost  of  the  unfaithfulness  of  those  who 
founded  this  nation  to  the  idea  by  which  the  nation  lives.  What 
does  it  measure?  It  is  substantially  a  thousand  millions  a  year 
for  nine  years ;  or  at  the  wages  of  five  hundred  dollars  a  year,  the 
labor  of  two  millions  of  men  exerted  continuously  during  the 
whole  of  that  period.  It  is  three  times  as  much  as  the  slave  prop¬ 
erty  of  the  country  was  ever  worth.  It  is  a  sum  which  at  interest 
would  yield  to  the  end  of  time  twice  as  much  as  the  annual  slave 
product  of  the  South  in  its  best  estate. 

u  The  places  of  those  who  sleep  in  their  graves  have  been  filled 
by  new  laborers;  the  incubus  of  slavery,  which  was  slowly  but 
surely  making  the  fertile  South  a  desert  scorched  as  by  a  consum¬ 
ing  fire,  has  been  removed;  thousands  of  miles  of  new  railroads ; 
inventions  never  before  excelled  in  their  labor-saving  character; 
millions  of  acres  of  the  richest  lands  opened  to  settlement,  now 
render  labor  easy  and  product  large.’ ’  Without  faltering  and  with¬ 
out  tampering  with  the  public  faith,  it  is  now  the  duty  of  this 
people  to  undertake'the  far  easier  task  of  payment  for  the  service 
already  rendered.  If  we  hesitate  or  falter,  dishonor,  second  only 
to  that  which  tolerated  slavery,  will  overwhelm  the  land,  and  the 
idea  of  a  free  people  governing  themselves  will  become  a  scorn  and 
a  by-word  among  nations. 


PAYMENT  OF  THE  WAR  DEBT. 

From  Report  of  the  Secretary  of  the  Treasury  (Hugh  Mc¬ 
Culloch)  1884,  pp.  xxvii-xxix. 

It  is  in  the  highest  degree  -gratifying  to  the  Secretary  to  notice 
the  great  reduction  of  the  public  debt  since  it  reached  its  highest 
point  in  August,  1865,  and  its  continued  reduction  since  his  last 
report,  in  1868.  The  following  table  exhibits  the  reduction  both 
of  principal  and  interest :  — 


APPENDIX  III. 


619 


On  August  31,  1865,  the  indebtedness  of  the  United  States,  not 
including  bonds  issued  to  the  Pacific  Railroad  Companies,  was  as 
follows :  — 


Debt  bearing  coin  interest . $1,108,310,191  80 

Debt  bearing  currency  interest  ....  1,273,220,103  16 
Matured  debt  not  presented  for  payment  .  1,503,020  09 

Debt  bearing  no  interest .  461,616,31151 


Total  debt . $2,844,649,626  56 

Cash  in  the  treasury .  88,218,055  13 


Amount  of  debt  less  cash  in  the  treasury  $2,756,431,571  43 


The  annual  interest  charge  was  $150,977,697.87,  and  the  average 
rate  paid  was  6  per  cent. 

On  Nov.  1,  1868,  the  indebtedness  of  the  United  States,  not 
including  bonds  issued  to  the  Pacific  Railroad  companies  was  as 
follows :  — 


Debt  bearing  coin  interest . $2,107,577,950  00 

Debt  bearing  currency  interest  ....  72,325,000  00 

Matured  debt  not  presented  for  payment  .  9,753,723  64 

Debt  bearing  no  interest .  409,151,898  42 


Total  debt . $2,598,808,572  06 

Cash  in  the  treasury .  113,873,019  24 


Amount  of  debt  less  cash  in  the  treasury  $2,484,935,552  £2 


The  annual  charge  was  $126,408,343,  and  the  average  rate  paid 
was  5  -fo  per  cent. 

On  Nov.  1,  1884,  the  public  debt  was  as  follows :  — 


Debt  bearing  interest . 

Debt  on  which  interest  has  ceased  since 

maturity . 

Debt  bearing  no  interest . 


$1,206,475,600  00 

12,547,485  26 
623,468,436  36 


Total  debt  .  . 

Cash  in  the  treasury 


$1,842,491,521  62 
434,008,572  93 


Amount  of  debt  less  cash  in  the  treasury  $1,408,482,948  69 


620 


ECONOMIC  HISTORY. 


The  annual  interest  charge  is  now  (1884)  $47,323,831.50,  and 
the  average  rate  paid  3  per  cent. 

Reduction  of  debt  in  sixteen  years  .  .  .  $1,076,452,604  13 

Reduction  of  annual  interest  charge  .  .  79,084,511  50 

Reduction  of  debt  in  nineteen  years  .  .  .  1,347,948,622  74 

Reduction  of  annual  interest  charge  .  .  103,653,866  37 

r  t  V  4 

In  the  management  of  its  debt  the  United  States  has  been  an 
example  to  the  world.  Nothing  has  so  much  surprised  European 
statesmen  as  the  fact  that  immediately  after  the  termination  of  one 
of  the  most  expensive  and,  in  some  respects,  exhaustive  wars  that 
have  ever  been  carried  on,  the  United  States  should  have  com¬ 
menced  the  payment  of  its  debt  and  continued  its  reduction  through 
all  reverses  until  nearly  one  half  of  it  has  been  paid;  that  reduc¬ 
tion  in  the  rate  of  interest  has  kept  pace  with  the  reduction  of  the 
principal ;  that  within  a  period  of  nineteen  years  the  debt,  which 
it  was  feared  would  be  a  heavy  and  never  ending  burden  upon  the 
people,  has  been  so  managed  as  to  be  no  longer  burdensome.  It  is 
true  that  all  this  has  been  effected  by  heavy  taxes,  but  it  is  also 
true  that  these  taxes  have  neither  checked  enterprise  nor  retarded 
growth. 


APPENDIX  IV. 


621 


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i  Fiscal  years  ended  30  June.  2  Years  ended  31  December. 


V. 


AMERICAN  PROGRESS  IN  MANUFACTURES. 

S.  N.  D.  NORTH. 

Compiled  from  the  Twelfth  Census,  Vol.  VII.,  pp.  xlyii.-clv. 

The  Twelfth  Census  marks  the  close  of  the  first  complete  cen¬ 
tury  of  manufactures  in  the  United  States.  As  a  basis  from  which 
to  measure  the  progress  of  the  one  hundred  years,  there  is  available 
a  government  paper,  now  become  classic,  which  fairly  represents 
the  industrial  situation  in  the  United  States  shortly  after  the 
organization  of  the  federal  government,  and  just  prior  to  the  open¬ 
ing  of  the  nineteenth  century.  This  is  the  “  Report  on  Manufac¬ 
tures,”  submitted  to  Congress  in  1791,  by  Alexander  Hamilton, 
Secretary  of  the  Treasury,  in  obedience  to  an  order  of  the  House 
of  Representatives.  He  enumerated  some  17  industries  which  had 
“  grown  up  and  flourished  with  a  rapidity  which  surprises,  affording 
an  encouraging  assurance  of  success  in  future  attempts.”  The  17 
industries  were  as  follows : 

1.  Skins.  —  Tanned  and  tawed  leather,  dressed  skins,  shoes,  boots, 
and  slippers,  harness  and  saddlery  of  all  kinds,  portmanteaus  and  trunks, 
leather  breeches,  gloves,  muffs  and  tippets,  parchment  and  glue. 

2.  Iron.  —  Bar  and  sheet  iron,  steel,  nail  rods  and  nails,  implements 
of  husbandry,  stoves,  pots  and  other  household  utensils,  the  steel  and  iron 
work  of  carriages,  and  for  shipbuilding,  anchors,  scale  beams  and  weights, 
and  various  tools  of  artificers,  arms  of  different  kinds ;  though  the  manu¬ 
facture  of  these  last  has  diminished  for  want  of  a  demand. 

3.  Wood.  —  Ships,  cabinet  wares,  and  turnery,  wool  and  cotton  cards, 
and  other  machinery  for  manufactures  and  husbandry,  mathematical  in¬ 
struments,  coopers’  wares  of  every  kind. 

4.  Flax  and  hemp.  —  Cables,  sail  cloth,  cordage,  twine  and  pack 
thread. 

5.  Bricks  and  coarse  tiles  and  potters’  wares. 

6.  Ardent  spirits  and  malt  liquors. 

7.  Writing  and  printing  paper,  sheathing  and  wrapping  paper,  paste¬ 
board,  fullers’  or  press  papers,  paper  hangings. 


APPENDIX  V . 


623 


8.  Hats  of  fur  and  wool,  and  mixture  of  both,  women’s  stuff  and  silk 
shoes. 

9.  Refined  sugars. 

10.  Oils  of  animals  and  seeds,  soap,  spermaceti  and  tallow  candles. 

11.  Copper  and  brass  wires,  particularly  utensils  for  distillers,  sugar 
refiners  and  brewers;  andirons  and  other  articles  for  household  use, 
philosophical  apparatus. 

12.  Tinwares  for  most  purposes  of  ordinary  use. 

13.  Carriages  of  all  kinds. 

14.  Snuff,  chewing  and  smoking  tobacco. 

15.  Starch  and  hair  powder. 

16.  Lampblack  and  other  painters’  colors. 

17.  Gunpowder. 

In  addition  to  the  industries  above  enumerated,  which  were  car¬ 
ried  on  as  regular  trades  in  many  localities,  Mr.  Hamilton  went  on 
to  describe  — 

a  vast  scene  of  household  manufacturing,  which  contributes  more  largely 
to  the  supply  of  the  community  than  could  be  imagined  without  having 
made  it  an  object  of  particular  inquiry. 

The  “  manufactories  carried  on  as  regular  trades,”  and  included 
in  Mr.  Hamilton’s  category,  comprised  such  as  would  naturally 
spring  up  in  a  new  country  to  supply  the  immediate  necessities 
of  the  inhabitants,  together  with  those  whose  materials  were  most 
abundant  and  inviting.  Agricultural  implements  and  other  tools 
of  industry  were  made  in  quantities  fully  equal  to  the  demand. 
Firearms  were  also  made.  The  dressing  of  skins,  especially  tan¬ 
ning,  had  become  an  important  industry,  and  was  carried  on  both 
in  establishments  exclusively  devoted  to  the  purpose,  and  by  many 
shoemakers  and  farmers  as  a  subsidiary  occupation.  The  number 
of  brewers  and  distillers  was  remarkable,  and  nearly  the  entire 
domestic  demand  for  beverages  was  supplied  by  home  production. 
Sawmills,  grist  mills,  brick  kilns,  wool-carding  mills,  and  fulling 
mills  existed  in  great  number,  but  always  on  a  small  scale,  supply¬ 
ing  only  local  needs.  The  manufacture  of  paper,  which  had  been  a 
successful  colonial  industry,  also  supplied  the  domestic  require¬ 
ments,  and  several  glass  works  existed.  “  Iron  works  have  greatly 
increased  in  the  United  States,”  said  Mr.  Hamilton,  “  and  are  prose¬ 
cuted  with  much  more  advantage  than  formerly.”  The  shipbuild¬ 
ing  industry  was  particularly  well  developed  and  widespread.  In 
1793  the  tonnage  of  the  United  States  exceeded  that  of  every  other 


624 


ECONOMIC  HISTORY. 


\ 

nation  except  England.  In  the  main,  however,  the  people  had 
confined  themselves  to  such  manufactures  as  could  not  he  imported 
to  advantage.  Foreign  goods,  chiefly  textiles,  were  largely  im¬ 
ported  in  exchange  for  agricultural  products. 

In  1810  Albert  Gallatin,  Secretary  of  the  Treasury,  in  response 
to  a  resolution  of  the  House  of  Representatives  of  June  7,  1809, 
made  a  report  which  is  an  admirable  summary  of  the  condition  of 
American  manufactures  at  that  date.  Secretary  Gallatin  estimated 
that  in  1809  the  value  of  the  products  of  American  manufactures 
exceeded  $120,000,000.  Tench  Coxe’s  estimate,  based  upon  the 
returns  obtained  at  the  census  of  1810,  was  $198,613,471,  and  the 
Treasury  reports  show  that  in  1811  American  manufactures  to 
the  value  of  $3,039,000  were  exported.  The  censuses  immediately 
following  throw  little  light  upon  the  rate  of  growth,  that  of  1820 
being  so  defective  that  Congress  never  authorized  the  publication 
of  the  figures.  The  enumeration  of  manufactures  was  omitted 
altogether  from  the  census  of  1830;  and  the  census  of  1840  made 
no  attempt  whatever  to  foot  up  the  aggregate  value  of  the  products 
returned.  The  census  of  1850  fixed  this  value  at  $1,019,106,616 
for  that  year  —  an  increase  of  fivefold  over  Mr.  Coxe’s  estimate  for 
1810.  It  is  clear  from  the  report  of  this  census  and  from  a  great 
body  of  unofficial  data  available,  that  the  country  had  made  notable 
progress  in  nearly  every  line  of  manufactures,  and  laid  the  founda¬ 
tions  deep  and  broad  for  subsequent  development.  But  it  may  be 
noted  that  until  nearly  1840,  iron  continued  to  be  smelted  by  char¬ 
coal,  the  process  differing  little  from  that  employed  in  colonial 
times,  and  not  until  the  decade  between  1830  and  1840  was  pud¬ 
dling  generally  introduced  in  the  United  States.  During  this 
decade  the  iron  rails  used  in  the  construction  of  railroads  were 
obtained  exclusively  by  importation;  coke  was  not  generally  used 
in  smelting  until  1850;  in  1860  our  production  of  pig  iron  reached 
only  987,559  tons,  in  comparison  with  the  14,452,234  tons  pro¬ 
duced  in  1900;  steel  rails  were  not  manufactured  in  the  United 
States  until  1860;  and  the  first  Bessemer  steel  was  produced  here 
in  1864. 

The  factory  system  of  manufacture,  so  called,  in  contrast  to 
domestic  and  shop  manufacture,  had  practically  no  existence  in  the 
United  States  at  the  opening  of  the  nineteenth  century,  although 
its  development  in  England,  particularly  in  the  textile  industries, 
had  been  rapid  during  the  last  quarter  of  the  eighteenth  century. 
During  or  just  prior  to  that  period,  the  great  basic  inventions  for 


APPENDIX  V . 


625 


automatic  textile  manufacture  were  put  in  practical  operation  in 
England.  These,  together  with  the  invention  of  the  steam  engine, 
which  occurred  at  about  the  same  time,  rapidly  withdrew  manufac¬ 
turing  industries  from  the  household  and  the  shop,  and  concen¬ 
trated  them  in  the  factory,  where  large  bodies  of  men  and  women 
worked  for  stipulated  wages  under  skilled  direction,  thus  accom¬ 
plishing  what  is  commonly  called  the  industrial  revolution,  and 
inaugurating  the  factory  system  of  manufacture. 

This  system  obtained  its  first  foothold  in  the  United  States  dur¬ 
ing  the  period  of  embargo  and  the  War  of  1812.  The  manufacture 
of  cotton  and  wool  passed  rapidly  from  the  household  to  the  mill ; 
but  the  methods  of  domestic  and  neighborhood  industry  continued 
to  predominate,  even  in  these  industries,  down  to  and  including  the 
decade  between  1820  and  1830;  and  it  was  not  until  about  1840 
that  the  factory  method  of  manufacture  extended  itself  widely  to 
miscellaneous  industries,  and  began  rapidly  to  force  from  the  mar¬ 
ket  the  handmade  products  with  which  every  community  had  hitherto 
chiefly  supplied  itself.  It  seems  probable  that  until  about  the  year 
1850,  the  bulk  of  general  manufacturing  done  in  the  United  States 
was  carried  on  in  the  shop  and  the  household,  by  the  labor  of  the 
family  or  individual  proprietors,  with  apprentice  assistants,  as  con¬ 
trasted  with  the  present  system  of  factory  labor,  compensated  by 
wages,  and  assisted  by  power. 

The  census  of  1850  is  therefore  the  proper  starting  point  for  the 
comparative  statistics  of  manufactures,  although  it  is  not  possible 
to  make  any  analysis  of  the  figures  returned  by  that  census,  which 
will  determine  with  certainty  the  proportion  of  manufactures  pro¬ 
duced  in  factories,  in  distinction  from  the  products  of  the  household 
and  of  the  neighborhood  shop.  Since  the  date  of  that  census,  the 
relative  value  of  the  manufactured  products  of  the  shop  and  the 
household  has  steadily  decreased,  until,  at  the  Twelfth  Census,  it 
represents  but  an  insignificant  part,  say  one-thirteenth,  of  the  total 
value  of  products. 

Not  until  the  decade  between  1860  and  1870  did  it  become  ap¬ 
parent  that  the  complete  supply  of  staple  products  for  the  home 
market  was  within  the  capacity  of  domestic  manufacture.  During 
the  Civil  War,  the  great  demand  for  manufactured  supplies  of 
every  description,  and  the  high  protective  duties  on  imports,  neces¬ 
sitated  by  the  revenue  requirements  of  the  government,  stimulated 
enterprise  and  production  to  an  extent  not  known  before  or 

since.  The  census  indicates  that  the  value  of  manufactured  products 

40 


626 


ECONOMIC  HISTORY . 


more  than  doubled  in  that  decade,  increasing  from  $1,885,861,676  in 
1860  to  $4,232,325,442  in  1870.  The  actual  increase  was,  however, 
somewhat  less,  and  the  increase  between  1870  and  1880  somewhat 
greater,  than  the  figures  indicate;  since  the  values  reported  in 
1870  were  based  upon  a  paper  currency,  while  those  of  1860  and 
1880  were  gold  values.  The  increase  from  1880  to  1890  was  larger 
than  in  any  preceding  decade.  The  figures  of  the  census  of  1890 
indicate  a  period  of  unprecedented  industrial  prosperity.  The  full 
effect  of  labor-saving  devices  had  begun  to  be  felt;  great  progress 
had  been  made  in  the  utilization  of  the  agricultural  and  mineral 
resources  of  the  country;  the  vast  West  was  just  emerging  from 
the  frontier  stage ;  capital  was  abundant,  and  at  all  points  available 
for  the  extension  and  strengthening  of  every  line  of  industry. 

The  decade  covered  by  the  Twelfth  Census  shows  a  relatively 
small  rate  of  progress,  measured  by  percentages,  but  in  many  re¬ 
spects  it  was  the  most  notable  in  our  history.  The  absolute  increase 
in  gross  value  of  products  during  the  decade  —  $3,641,850,215  — 
was  nearly  equal  to  that  of  the  entire  period  up  to  and  including 
the  census  of  1870.  The  decade  will  remain  conspicuous  in  our 
manufacturing  history  for  two  things:  The  entrance  of  the  United 
States  into  international  trade  in  manufactures,  in  systematic  com¬ 
petition  with  the  chief  exporting,  nations ;  and  the  reorganization 
of  industry  on  broader  lines,  through  industrial  combination,  which 
has  placed  many  branches  of  manufacture  on  a  new  basis  in  relation 
to  competition. 

The  manufacturing  industries  of  the  United  States  in  1900  may 
best  be  considered  from  the  point  of  view  of  their  interdependence 
or  relationship  to  one  another.  For  this  purpose  the  Twelfth  Cen¬ 
sus  has  brought  the  industries  of  the  country  together  into  15 
grand  groups.  The  354  industries  of  the  census  correspond,  in 
a  measure,  to  the  “  species  ”  of  natural  history,  while  the  15  great 
groups  of  industries  are  analogous  to  the  “  genera,  ”  the  whole  mak¬ 
ing  the  great  “  order  ”  of  manufacturing  industry. 

1.  Food  and  Kindred  Products.  —  First  among  the  15  groups 
stands  the  manufacture  of  food  and  kindred  products,  with  $2,277,- 
702,010  value  in  1900,  which  was  nearly  double  that  for  1880,  and 
constituted  17.5  per  cent  of  the  total  value  of  all  products  of  manu¬ 
facture.  Included  in  the  group  are  25  specified  manufacturing 
industries  which  utilize  one  or  more  of  the  food  products  of  agricul¬ 
ture.  The  development  of  this  group  of  industries  is  a  remarkable 
demonstration  of  the  advance  of  factory  manufacturing  in  recent 


APPENDIX  F. 


627 


years,  and  of  its  invasion  of  a  field  once  belonging  almost  exclus¬ 
ively  to  agriculture  and  the  household. 

Wholesale  slaughtering  and  meat  packing,  represented  by  573 
establishments  with  gross  products  of  $698,206,548,  the  largest 
value  of  any  industry  in  the  group,  or  indeed  of  any  industry  in 
any  of  the  15  groups,  with  the  exception  of  iron  and  steel.  This 
industry  made  its  first  appearance  as  a  manufacture  in  the  census 
reports  of  1850.  It  is  further  notable  for  its  remarkable  concentra¬ 
tion,  the  single  state  of  Illinois  contributing  more  than  one-third 
to  the  total  value  of  the  product. 

In  marked  contrast  in  respect  to  distribution  is  the  second  most 
important  manufacture  included  in  this  group,  that  of  flouring  and 
grist  mill  products,  with  a  value  of  $560,719,063,  from  25,258 
establishments,  located  in  every  state  in  the  Union.  At  all  cen¬ 
suses,  until  1900,  the  flour  and  grist  milling  industry  was  the  most 
important  in  the  United  States  in  value  of  products.  The  census 
of  1850,  which  returned  but  four  industries  with  products  exceeding 
$50,000,000  in  value,  gave  at  the  head  of  the  list  flour  and  grist 
mills,  with  11,891  establishments  and  products  valued  at  $136,- 
056,736.  Since  1850  the  number  of  such  mills  has  increased  to 
25,258  and  the  value  of  products  to  $560,719,063. 

2.  Textiles .  —  While  manufactures  of  food  stuffs  form  the  most 
valuable  class  of  products,  manufactures  of  clothing  and  fabrics  of 
every  description  for  household  and  other  uses  occupy  the  third 
rank.  The  fundamental  materials  of  this  group  are  textile  fibers 
of  every  variety  —  cotton,  wool,  flax,  silk,  jute,  hemp,  ramie,  and 
other  coarser  fibers,  and  all  admixtures  of  them.  The  group  in¬ 
cludes  not  merely  the  fabrics  utilized  for  clothing,  but  such  other 
products  as  carpets,  oilcloths,  mats  and  mattings,  nets,  cordage,  etc., 
and  the  manipulation  of  textile  goods  in  every  form  and  for  every 
purpose.  Forty-four  classes  of  manufactures  appear  in  this  group, 
which,  at  the  census  of  1900,  comprised  30,048  establishments, 
being  fourth  in  rank  among  the  15  groups  in  this  particular.  The 
value  of  products  of  these  establishments  was  $1,637,484,484,  which 
constituted  12.6  per  cent  of  the  total  value  of  all  products  for  the 
United  States,  and  was  exceeded  in  1900  only  by  group  1,  food  and 
kindred  products,  and  by  group  3,  iron  and  steel  and  their  products. 
At  the  census  of  1890  it  was  second  in  respect  to  value  of  products. 

The  cotton  manufacture  stands  at  the  head  of  the  textile  industries 
proper  with  respect  to  all  the  items  covered  by  the  census  reports, 
the  value  of  its  products  being  $332,806,156.  From  the  beginning 


628 


ECONOMIC  HISTORY. 


of  the  century  this  industry  has  been  one  of  the  leading  and  in  some 
respects  the  most  typical  of  our  factory  manufactures,  and  it  is 
regarded  as  the  most  highly  organized.  At  the  census  of  1840, 
1,240  mills  were  returned,  with  72,119  persons  employed,  a  capital 
of  $51,102,359,  and  products  valued  at  $46,350,453,  a  value  ex¬ 
ceeded  at  that  census  only  by  the  value  of  the  products  of  the  flour¬ 
ing  and  grist  mills.  At  the  census  of  1850,  cotton  manufacture 
was  second  in  rank,  the  value  of  its  products  being  $65,501,687  for 
1,074  establishments.  In  1900  there  were  but  973  cotton  mills, 
excluding  all  the  establishments  engaged  in  the  rehandling  of 
primary  products  and  the  manufacture  of  specialties,  which  at  this 
census  are  separately  returned  for  the  first  time  under  the  distinct 
industry  name,  u  cotton,  small  wares.”  Of  this  class,  there  were 
82  establishments  reported.  The  United  States  has  pressed  forward 
so  rapidly  in  the  manufacture  of  cotton  that  in  the  production  of 
cotton  goods,  judged  by  relative  spinning  capacity,  it  now  holds  the 
second  rank  among  nations.  In  1900  Great  Britain  was  operating 
45,400,000  spindles,  as  contrasted  with  18,590,515  in  the  United 
States  ;  7,155,500  in  Germany  ;  6,090,889  in  Russia  ;  5,039,000  in 
France  ;  4,945,783  in  India  ;  3,140,171  in  Austria  ;  2,614,500  in 
Spain  ;  2,092,730  in  Italy  ;  and  1,709,400  in  Switzerland.  The 
number  of  spindles  in  the  world  in  1900  has  been  estimated  at 
103,383,386,  and  on  this  basis  the  United  States  operates  18  per  cent, 
of  the  world’s  spindles. 

The  wool  manufacture  took  root  in  the  colonies  as  early  as  any 
other  industry,  and  down  to  the  period  of  the  War  of  1812  it  re¬ 
tained  all  the  characteristics  of  a  neighborhood  industry.  The 
advance  of  the  wool  manufacture  into  the  perfected  factory  system 
has  been  more  slow  than  that  of  cotton,  although  there  are  many 
wTool-working  establishments  of  enormous  productive  capacity.  The 
census  of  1900  shows  a  continued  decadence  in  the  manufacture  of 
woolens  proper,  as  distinguished  from  worsteds,  there  being  an 
actual  decrease  in  the  value  of  the  products  of  woolen  mills,  accom¬ 
panying  a  marked  increase  in  the  value  of  worsted  products. 

The  worsted  manufacture  is  an  industry  of  comparatively  recent 
origin  in  the  United  States.  Early  in  the  forties  there  were  two 
or  three  large  mills  in  New  England  for  the  production  of  worsted 
fabrics  or  stuffs  for  women’s  wear,  but  the  manufacture  made  little 
headway  until  after  the  close  of  the  Civil  War,  and  it  was  not  until 
about  1870  that  the  manufacture  of  worsted  goods  for  men’s  wear 
was  seriously  undertaken  in  this  country.  Since  then,  however,  the 


APPENDIX  V. 


629 


development  of  the  industry  along  these  lines  has  been  phenomenal, 
and  there  are  now  in  this  country  half  a  dozen  or  more  mills  of 
most  modern  equipment  turning  out  these  goods  in  larger  quantities 
than  any  foreign  establishments. 

The  most  notable  achievement  in  textile  manufactures  has  been, 
perhaps,  in  the  carpet  industry.  Beyond  question  the  United 
States  is  the  greatest  carpet  manufacturing  nation.  The  133  qiills 
engaged  in  this  industry  in  1900  produced  $48,192,351  worth  of 
two-ply  or  three-ply  ingrains,  Brussels,  moquettes,  tapestries,  vel¬ 
vets,  Smyrnas,  and  the  higher  grades  of  Axminsters  and  Aubussons, 
representing  an  aggregate  of  over  80,000,000  square  yards  of  car¬ 
pets.  The  development  of  the  machine  manufacture  of  carpets 
dates  from  1844. 

The  manufacture  of  hosiery  and  knit  goods  has  in  previous 
censuses  been  treated  as  a  branch  of  wool  manufacture;  it  is  now 
more  properly  presented  as  a  cognate  industry,  wool  having  given 
place  to  cotton  as  the  chief  material  of  these  goods.  In  this  in¬ 
dustry  also  the  United  States  has  outstripped  the  rest  of  the  world. 
More  machine-knit  goods,  both  underwear  and  hosiery,  are  turned 
out  annually  in  this  country  than  in  all  other  countries  combined. 
The  knitting  of  socks  and  stockings  remained  wholly  a  household 
industr}’’  until  1832,  when  the  principle  of  knitting  by  power  was 
first  successfully  applied  at  Cohoes,  N.  Y.  The  value  of  the  prod¬ 
ucts  of  hosiery  and  knit  goods  mills  in  the  census  year  was 
$95,482,566,  an  increase  of  42  per  cent,  since  1890. 

Notable  also  among  textiles  for  its  rapid  development  in  recent 
years  is  the  silk  manufacture.  In  1850  there  were  but  67  estab¬ 
lishments  engaged  in  this  industry,  and  their  production  was 
valued  at  only  $1,809,476.  The  present  census  shows  483  estab¬ 
lishments  manufacturing  goods  valued  at  $107,256,258,  which  is 
an  increase  of  22.9  per  cent,  since  1890.  The  United  States  has 
in  fifty  years  become  the  chief  silk-manufacturing  nation  in  the 
world,  with  the  possible  exception  of  France,  the  value  of  whose 
products  in  this  industry  may  still  slightly  exceed  that  of  the 
products  of  the  United  States. 

3.  Iron  and  Steel.  —  The  third  great  group  comprises  the  prod¬ 
ucts  of  iron  and  steel  in  almost  infinite  variety.  Returns  were 
received  from  13,896  establishments  in  this  group  representing  a 
value  of  products  of  $1,793,490,908,  which  constitutes  13.8  per 
cent,  of  the  total  gross  value  of  products  of  all  industries  during 
the  census  year.  Since  the  last  census  there  has  developed  an  en- 


680 


ECONOMIC  HISTORY. 


tirely  new  branch  of  manufacture,  that  of  tin  and  terne  plate,  rep¬ 
resented  in  1900  by  57  establishments,  with  3,671  wage-earners, 
and  products  valued  at  $31,892,011.  The  increase  in  the  value  of 
products  of  the  iron  and  steel  group  was  56.8  per  cent. 

At  the  time  when  the  census  was  taken  the  blast  furnaces,  roll¬ 
ing  mills,  steel  works,  forges,  and  bloomeries  of  the  country  were 
in  a  state  of  activity  unprecedented  in  our  history,  and  yet  it  was 
impossible  to  promptly  supply  the  demands  for  their  products.  In 
these  mills  have  occurred  the  most  marked  advances  in  labor-saving 
machinery  and  in  appliances  for  reducing  labor  costs.  To  these 
advances,  which  are  nearly  all  of  American  invention,  is  due  the 
fact  that  since  the  last  census  was  taken  the  United  States  has 
reached  a  point  where,  measured  by  value  of  products,  it  stauds 
preeminently  the  greatest  iron-manufacturing  nation  in  the  world. 

4.  Lumber  and  its  Rcmanufactures.  —  The  fourth  great  group 
of  industries  is  that  which  uses  wood  as  its  material.  The  Twelfth 
Census  shows  for  this  group  47,079  establishments,  $946,116,515 
capital,  and  $1,030,906,579  as  the  value  of  products,  which  was  7.9 
per  cent  of  the  total  value  of  products  of  the  country. 

In  1850,  lumber,  sawing  and  planing,  was  second  in  rank,  with 
17,895  establishments  and  products  valued  at  $58,520,966.  At  the 
present  census,  37,239  establishments  reported  $735,175,987  as  the 
value  of  lumber  and  timber  products  and  planing-mill  products. 
These  two  branches  were  shown  as  a  single  industry  in  1850,  and 
the  combination  is  made  here  for  purposes  of  comparison,  thus 
eliminating  duplications.  Subtracting  from  this  combined  value 
of  products  the  cost  ($94,137,837)  of  material  purchased  in  a 
partly  manufactured  form  by  the  planing  mills,  there  remains 
$641,038,150  as  the  true  net  value  of  products,  or  eleven  times 
the  amount  reported  fifty  years  before. 

5.  Leather  and  its  Finished  Products.  —  The  fifth  great  group 
of  national  industries  is  that  which  depends  upon  skins  and  hides 
for  its  chief  raw  materials.  It  includes  in  its  products  the  leather 
itself  in  all  its  forms,  tanned  and  curried,  patent  and  enameled, 
and  morocco,  as  well  as  the  finished  products  into  which  the  leather 
is  remanufactured.  The  most  important  among  these  are  included 
under  the  factory  production  of  boots  and  shoes,  and  the  minor  in¬ 
dustries  of  saddlery  and  harness,  trunks,  belting,  and  a  great  variety 
of  other  leather  goods. 

The  group  includes  16,989  establishments,  having  a  capital  of 
$343,600,513,  employing  an  average  of  238,202  wage-earners,  and 


APPENDIX  F. 


681 


reporting  a  value  of  products  of  $583,731,046,  which  constitutes  4.5 
per  cent  of  the  total  value  of  products  for  all  industries.  Included 
in  the  fifteenth  group,  that  of  hand  trades,  are  reports  from  23,560 
establishments  engaged  in  the  custom  manufacture  and  repairing  of 
boots  and  shoes,  representing  an  additional  product  of  $26,550,678. 
It  is  significant  of  the  evolution  of  the  industry  that  these  latter 
establishments,  now  excluded  from  the  leather  group  by  the  some¬ 
what  arbitrary  classification  of  the  Census  Office,  represented  until 
a  comparatively  recent  period  the  entire  product  of  boots  and  shoes. 

In  no  other  industry  is  the  advance  from  the  household  and 
small-shop  manufacture  more  clearly  shown  than  in  the  manufacture 
of  boots  and  shoes,  which  were  formerly  made  one  pair  at  a  time 
and  exclusively  by  hand,  but  which  are  now  produced  in  factories 
with  their  intricate  division  and  subdivision  of  labor,  by  w7hich 
each  employee  performs  but  one  of  the  score  or  more  of  separate 
operations  which  combine  to  turn  out  the  finished  product  with  the 
utmost  rapidity.  The  factory  manufacture  of  boots  and  shoes  had 
its  origin  in  this  country  about  1815.  The  development  of  the  in¬ 
dustry  is  almost  wholly  the  result  of  American  enterprise,  both  as 
to  machinery  and  methods,  and -this  is  the  only  country  in  which 
the  factory  production  of  boots  and  shoes  has  practically  driven  out 
the  hand-made  article.  Factory  methods  made  possible  the  pro¬ 
duction  in  the  census  year  of  219,000,000  pairs  of  boots,  shoes, 
and  slippers  of  all  descriptions.  A  large  and  increasing  proportion 
of  this  product  is  exported. 

6.  Paper  and  Printing .  —  The  sixth  great  group  is  that  of  paper 
and  printing,  in  which  26,747  establishments,  with  $557,610,887 
capital  and  297,551  employees,  turned  out  products  valued  at 
$606,317,768,  which  constituted  4.7  per  cent,  of  the  total  value 
of  products  for  all  industries.  The  value  of  products  of  this  group 
of  industries  in  1900  was  more  than  threefold  that  in  1880.  The 
census  classification  includes  in  this  group  the  manufacture  of  wood- 
pulp.  Many  of  the  great  paper-manufacturing  companies  of  the 
present  day  own  the  forests  and  operate  the  wTood-pulp  mills  in  in¬ 
timate  connection  and  often  in  the  same  buildings  with  their  paper 
mills.  This  condition  is  one  which  has  arisen  almost  wholly  dur¬ 
ing  the  last  decade  ;  and,  indeed,  the  whole  development  of  the 
manufacture  of  paper  from  the  fiber  of  wood  is  of  modern  date 
and  largely  of  American  origin.  Nowhere  in  industry  has  there 
occurred  an  evolution  o  striking  as  that  which  has  entirely 
changed  the  sources  and  character  the  materials  utilized.  The 


632 


ECONOMIC  HISTORY. 


paper  and  wood-pulp  industry  records  a  phenomenal  advance  during 
the  decade.  In  1900,  763  establishments  produced  $127,326,162 
worth  of  products,  an  increase  in  value  since  1890  of  61.3  per  cent. 

Next  in  importance  to  the  production  of  the  material  itself,  and 
of  even  greater  importance  than  the  manufacture  of  paper,  measur¬ 
ing  importance  by  value  of  product,  stands  printing  and  publishing, 
in  which  are  included,  under  separate  classes,  book  and  job  printing, 
music  printing,  and  the  printing  and  publishing  of  newspapers  and 
periodicals,  representing  among  them  an  aggregate  product  of 
$347,055,050,  or  more  than  one-half  of  the  value  of  all  products 
included  in  the  group.  The  old-fashioned,  laborious  method  of 
typesetting  by  hand  has  very  generally  given  place,  particularly 
in  newspaper  offices,  to  machine  typesetting.  Accompanying  this 
change  has  been  a  development  in  the  printing  press  which  permits 
the  production  of  newspapers  of  enormous  size  with  a  rapidity  and 
at  a  price  not  conceived  of  twenty-five  years  ago  as  within  the 
possibility  of  mechanical  enterprise. 

7.  Liquors  and  Beverages.  —  The  seventh  great  group  of  in¬ 
dustries  covers  the  production  of  liquors  and  beverages,  including, 
distilled  liquors,  malt  liquors,  wines,  and  mineral  and  soda  waters, 
and  the  important  cognate  industry  of  bottling.  The  group  in¬ 
cludes  7,861  establishments,  with  $534,101,049  capital,  63,072 
wage-earners,  and  with  products  valued  at  $425,504,167,  which 
sum  represents  3.3  per  cent,  of  the  total  value  of  products  for  all 
industries.  The  value  of  products  for  the  industry  has  more  than 
doubled  since  1880.  The  products  of  the  distilleries,  breweries, 
and  wineries  of  the  country  represented  a  total  annual  production 
of  1,325,358,094  gallons  of  beverages. 

8.  Chemicals  and  Allied  Products.  — The  eighth  great  group  of 
industries  is  that  of  chemicals  and  allied  products,  in  which  are 
included,  in  a  manner  somewhat  arbitrary,  the  manufacture  not 
only  of  chemicals  proper,  but  the  proprietary  and  patent  prepara¬ 
tions  of  drugs,  medicines,  and  compounds,  expressed  and  other  oils, 
non-mineral  paints,  explosives,  fertilizers,  dye  stuffs  and  extracts, 
salt,  petroleum  refining,  and  many  similar  industries,  the  total 
number  of  classes  being  20.  The  manufacture  was  carried  on  in 
5,444  establishments,  with  a  capital  of  $498,390,219,  employing 
101,522  wage-earners,  and  products  valued  at  $552,891,877,  or  4.3 
per  cent,  of  the  total  value  of  products  for  all  industries. 

This  group  is  one  of  vast  and  growiug  importance,  its  products 
contributing  in  constantly  increasing  quantities  to  the  subsidiary 


APPENDIX  V. 


633 


materials  and  supplies  required  in  nearly  every  other  line  of  manu¬ 
facture.  With  the  exception  of  lumber  products  and  the  hand 
trades,  all  the  remaining  groups  depend  more  or  less  upon  the 
assistance  of  the  chemical  industries,  and  to  the  remarkable  ad¬ 
vance  made  in  chemical  manufactures  we  may  attribute  a  large 
share  of  the  general  advance  made  in  all  industries.  The  statistics 
show  that  the  value  of  products  in  this  group  was  more  than  three¬ 
fold  that  in  1880.  This  increase  represents  a  great  variety  of 
chemical  products,  the  manufacture  of  which  had  previously  either 
not  been  undertaken  at  all  in  this  country,  or  only  in  the  most 
desultory  and  unsatisfactory  manner.  The  single  branch  of  the 
chemical  industry  in  which  the  United  States  appears  to  have 
lagged  behind  in  any  degree  is  in  the  manufacture  of  dye  stuffs 
and  coal-tar  products. 

9.  Clay,  Glass,  and  Stone  Products.  —  The  ninth  great  group 
is  that  of  clay,  glass,  and  stone  products,  among  which  industries, 
although  their  products  are  widely  dissimilar,  there  is  a  certain 
degree  of  kinship,  owing  to  the  fact  that  they  all  derive  their  raw 
materials  from  the  earth  by  extractive  processes,  and  these  raw 
materials  are  of  kinds  which  have  only  a  potential  value  as  they  lie 
in  the  earth,  the  value  as  represented  in  the  census  reports  being 
the  labor  cost  of  extraction  and  preparation.  Included  in  this 
group  are  sixteen  industries,  among  which  are  pottery  products, 
plate  and  window  glass  and  glassware  of  all  kinds,  the  reworking 
of  glass  and  clay  products,  mantels,  marble-work,  emery  wheels, 
lime  and  cement,  grindstones,  millstones,  hones  and  whetstones, 
monuments  and  tombstones,  kaolin  and  other  earth  grinding,  etc. 
The  group  shows  14,809  establishments,  with  $350,902,367  capital, 
244,987  wage-earners,  and  $293,564,235  as  the  value  of  products, 
or  2.3  per  cent  of  the  total  value  of  products  for  all  industries  — 
nearly  threefold  the  value  reported  in  1880. 

10.  Metals  and  Metal  Products ,  other  than  Iron  and  Steel.  — 
The  tenth  great  group  of  industries,  the  manufacture  of  metals 
other  than  iron  and  steel,  includes  35  of  the  census  industries, 
among  which  are  brass,  copper,  brass  castings,  watches,  clocks,  and 
jewelry,  gold  and  silver  reducing  and  refining,  plated  ware,  electro¬ 
plating,  zinc,  lead,  type  founding,  and  all  metal  working  other  than 
that  of  iron  and  steel.  The  development  of  these  industries  during 
the  last  decade  was  rapid,  being  enormously  stimulated  by  the  in¬ 
creased  utilization  of  electricity  for  both  power  and  heat.  The 
extension  of  the  street-railway  system  in  all  parts  of  the  country 


6  34 


ECONOMIC  HISTORY. 


since  the  successful  application  of  electricity  as  a  method  of  pro¬ 
pulsion,  has  been  one  of  the  chief  factors  in  quadrupling  the  uses 
of  copper  during  the  last  ten  years.  For  the  group  there  were 
reported  16,305  establishments,  with  $410,646,057  capital,  190,757 
wage-earners,  and  $748,795,464  as  the  value  of  products,  or  5.8  per 
cent,  of  the  value  of  products  for  all  industries.  The  total  value  of 
products  for  the  group  at  the  census  of  1880  was  $173,273,848. 
Thus  the  rate  of  increase  in  this  group  for  the  twenty  years  was 
considerably  greater  than  in  any  other  group,  except  vehicles  for 
land  transportation. 

11.  Tobacco.  —  The  eleventh  great  group  of  industries  comprises 
those  which  are  confined  to  the  manufacture  of  tobacco  in  any  of 
its  forms.  This  group  shows  15,252  establishments,  with  $124,- 
089,871  capital,  142,277  wage-earners,  and  products  of  $283,076,546 
in  value,  or  2.2  per  cent  of  the  total  gross  value  of  products  in 
1900,  an  increase  of  more  than  100  per  cent,  for  this  group  since 
1880.  This  industry  has  undergone  great  changes  since  the  Eleventh 
Census  was  taken.  In  all  manufacturing  communities  there  re¬ 
main  small  shops  for  the  manufacture  of  cigars,  and  this  branch  of 
the  industry  is  widely  distributed;  but  the  manufacture  of  smoking 
tobacco,  chewing  tobacco,  and  cigarettes  has  shown  a  remarkable 
tendency  toward  consolidation,  giant  organizations  controlling  the 
greater  p&rt  of  the  production. 

12.  Vehicles  for  Land  Transportation. — The  twelfth  great 
group  of  industries  includes  all  manner  of  vehicles  for  land  trans¬ 
portation.  These  manufactures  utilize  so  many  varieties  of  raw 
materials  that  it  is  impossible  to  class  them  together  on  that  basis, 
although  it  is  the  common  one  in  the  census  grouping,  and  they 
are  therefore  grouped  together  on  the  basis  of  the  similarity  in  use 
of  their  products.  They  include  nine  industries,  the  most  important 
of  which  are  the  manufacture  and  repair  of  cars  by  steam  and 
street  railway  companies,  the  manufacture  of  carriages  and  wagons, 
and  of  bicycles  and  tricycles.  There  were  10,113  establishments  in 
this  group,  with  $396,778,672  capital,  316,214  wage-earners,  and 
products  valued  at  $508,649,129,  or  3.9  per  cent  of  the  total  value 
of  products  for  all  industries,  an  increase  since  1880  of  384.6  per 
cent.,  or  nearly  four-fold. 

13.  Shipbuilding .  —  The  thirteenth  great  industry  group  is  that 
of  shipbuilding,  which  has  been  assigned  to  a  distinct  class,  not 
only  because  of  its  growing  importance  and  the  great  public  interest 
in  its  development,  but  also  because  it  utilizes  such  a  great  variety 


APPENDIX  V. 


635 


of  raw  materials  that  it  can  not  be  properly  assigned  to  any  of  the 
other  groups. 

A  remarkable  increase  in  this  industry  is  shown  by  the  statistics 
of  the  Twelfth  Census.  The  value  of  ships,  boats,  and  vessels  of  all 
kinds  produced  in  the  shipyards  of  the  country,  both  private  and 
governmental,  has  increased  from  840,342,115  in  1890  to  $85,612,- 
470  in  1900,  an  increase  of  112.2  per  cent.  The  whole  of  this 
increase,  however,  has  been  in  the  branch  of  iron  and  steel  shipbuild¬ 
ing  j  the  value  of  such  vessels  constructed,  not  including  those  in 
governmental  shipyards,  increased  from  $12,929,953  in  1890  to 
$50,367,739  in  1900,  or  289.5  per  cent.  On  the  other  hand,  there 
was  an  actual  decrease  of  3.7  per  cent  in  the  value  of  wooden  ships, 
boats,  etc.  (not  including  those  in  Government  shipyards),  built  in 
1900,  as  compared  with  the  output  of  the  year  1890,  the  amounts 
being  $24,210,419  and  $25,135,457  respectively. 

14.  Miscellaneous  Industries. — The  fourteenth  group  of  in¬ 
dustries  is  a  heterogeneous  grouping  of  all  the  miscellaneous  in¬ 
dustries  not  included  in  any  of  the  prior  groups,  nor  in  the  hand 
trades,  and  not  susceptible  of  such  inclusion.  It  comprises  all 
those  branches  of  true  manufacturing  which,  by  reason  of  their 
peculiar  character  as  specialties  or  novelties,  or  by  reason  of  thp 
special  raw  material  utilized,  or  for  any  other  reason,  can  not 
properly  be  classified  with  any  of  the  great  general  groups  preced¬ 
ing.  The  group  reported  29,479  establishments,  $1,348,920,721 
capital,  483,273  wage-earners,  and  products  valued  at  $1,004,092,- 
294,  or  7.7  per  cent  of  the  total  gross  value  of  products,  an  increase 
of  over  threefold  since  1880. 

15.  Hand  Trades. — There  remains  to  be  considered  one  great 
group  embracing  the  industries  commonly  known  as  hand  trades, 
which  in  this  census  have  been  segregated  from  the  manufacturing 
industries  proper,  in  order  to  bring  out  distinctly  the  relative  im¬ 
portance  of  each.  In  the  total  number  of  establishments  reporting 
at  the  Twelfth  Census,  these  hand  trades  naturally  represent  a  pro¬ 
portion  altogether  out  of  keeping  with  the  relative  value  of  their 
products.  In  1890  there  were  143,716  such  establishments  report¬ 
ing,  out  of  a  total  number  for  all  industries  of  355,415,  or  40.4 
per  cent.  In  1900  the  number  of  such  establishments  had  increased 
to  215,814,  and  represented  42.1  per  cent  of  the  total  of  512,254 
establishments.  In  1890  they  employed  661,760  persons,  including 
all  the  proprietors  of  such  establishments.  In  1900  the  number  of 
wage-earners  was  559,130,  to  which,  in  order  to  render  the  number 


636 


ECONOMIC  HISTORY. 


comparable  with  that  of  the  census  of  1890,  must  be  added  242,154 
proprietors,  making  a  total  of  801,284.  The  value  of  the  products 
of  these  establishments  in  1890  was  $1,009,347,226,  or  10.8  per 
cent,  of  the  total  gross  value  of  the  products  of  the  manufacturing 
industries  of  that  year.  In  1900  the  gross  value  of  products  was 
$1,183,615,478,  or  9.1  per  cent,  of  the  total. 

Included  in  the  15  groups  are  establishments  representing  nearly 
every  manufacturing  industry  which  is  pursued  by  man  in  any  part 
of  the  world.  The  exceptions  are  practically  confined  to  certain 
products  of  skilled  hand  labor,  ordinarily  known  as  specialties  or 
novelties.  Types  of  this  class  of  industry  are  the  manufacture  of 
lace,  rugs,  and  embroidery.  Even  here  the  machine  manufacture 
of  lace  from  cotton  threads  has  attained  a  considerable  development 
in  the  United  States  by  the  use  of  American  mechanisms. 

In  several  lines  of  manufacture,  moreover,  notably  in  the  textiles, 
American  production  is  still  confined  largely  to  what  are  known  as 
staple  products,  susceptible  of  rapid  production,  in  accordance  with 
a  uniform  standard,  at  a  minimum  labor  cost,  and  involving  a  com¬ 
paratively  small  element  of  artistic  skill  on  the  part  of  the  work¬ 
man.  It  is  a  fact  that  the  use  of  the  Jacquard  loom  in  the  weaving 
of  fancy  patterns  into  the  body  of  fabrics  is  not  as  general  in  the 
textile  factories  of  this  country  as  in  those  of  continental  Europe. 
In  all  branches  of  fancy  goods,  however,  there  has  been  a  notable 
progress  in  the  United  States  since  1890.  That  the  minds  of 
American  manufacturers  are  turning  more  and  more  to  the  increased 
development  of  the  artistic  side  of  manufacturing  is  shown  in  many 
ways,  and  notably  by  the  establishment  in  certain  manufacturing 
centers  —  largely  through  the  generosity  and  at  the  instigation  of 
manufacturers  —  of  schools  of  industrial  art,  where  special  attention 
is  paid  to  the  application  of  art  to  manufacture,  and  by  the  found¬ 
ing  of  textile  schools,  where  young  men  and  women  are  taught  the 
business  of  manufacturing  from  the  scientific  and  artistic  points  of 


view. 


INDEX. 


Ad  valorem  duties,  principle  of,  186. 

Agriculture,  system  of,  in  the  18th  cen¬ 
tury,  58;  in  the  19th,  63;  injured  by 
commercial  legislation,  67;  importance 
to  Germany  of,  181 ;  condition  of,  in  Eng¬ 
land,  212,  215,  219,  220;  in  Ireland,  233- 
237  ;  Italian,  303 ;  effects  of  improve¬ 
ments  on,  211,  313-315,  320-321. 

Alsace-Lorraine,  56,  330. 

Ancien  regime,  budget  of,  75. 

Anjou,  system  of  metairie  in,  62. 

Annuities,  conversion  of  perpetual  into 
terminable,  140-141. 

Anti-Corn-Law  League,  formation  of,  214; 
object  of,  216;  influence  of,  218,  229. 

Arkwright,  Sir  Richard,  his  invention  of 
the  water-frame,  39,  40,  129. 

Army,  organization  of,  under  Louis  XVI., 
83 ;  absence  of  standing,  in  America, 
417,  422. 

Artois,  Charles,  Count  of,  his  opposition  to 

,  reform,  73. 

Auerstadt,  87. 

Atkinson,  Edward,  298,  318,  410,  546. 

Augustus,  Emperor,  27. 

Australia  and  California,  effect  of  gold  dis¬ 
coveries  in,  259,  264-269,  277-279. 

Austria,  advantage  of  Suez  Canal  to,  302 ; 
financial  crisis,  357,  359,  363;  national 
wealth  of,  476  ;  business  failures  in,  503. 

Auvergne,  peasants  of,  oppose  reform,  80. 

Baltic  ports,  hampered  by  Sound  dues, 
180. 

Banks  of  England  and  of  France,  fluctua¬ 
tions  in  rate  of  discount  of,  496-497. 

Basic  steel,  541. 

Baxter,  Dudley,  estimate  of  British  income 
by,  474. 

Beddoes,  Dr.,  assists  Davy,  52. 

Belgium,  417,  483,  485,  490,  500,  507. 

Bell,  Mr.,  inventions  of,  for  printing  cali¬ 
coes,  43-44. 

Belligerent  and  neutral  rights,  conflict  of, 
115. 


Berkeley,  Bishop,  449. 

Berlin  decree,  116. 

Berthollet,  M.,  his  experiments  in  bleach¬ 
ing,  43. 

Bessemer  steel,  312,  324,  438,  442,  448, 
572-576,  584,  624. 

Blockade,  neutral  demands  respecting,  109. 

Bolton,  adopts  cotton  manufacture,  35; 
birthplace  of  Arkwright  and  Crompton, 
213;  comparison  with  Lowell,  416. 

Boot  and  shoe  industry,  displacement  of 
labor  in,  by  machinery,  320,  631. 

Boulton,  Mr.,  of  Soho,  his  connection  with 
Watt,  49. 

Bourse,  the,  64. 

Bradford,  dependent  on  the  wool  trade,  32. 

Brazil,  6,  14. 

Bread,  cost  of  manufacture  and  distribu¬ 
tion,  321. 

Bretagne,  5,  6,  82. 

Brienne,  ministry  of,  81. 

Bright,  John,  214. 

Britain,  see  Great  Britain. 


California,  see  Australia  and  California. 

Calonne,  ministry  of,  75;  statement  of  mil¬ 
itary  expenses,  78;  new  measures  by, 
80;  dismissed,  81. 

Canada,  French  colony  of,  long  under  the 
government  of  an  exclusive  company,  8. 

Canada,  Dominion  of,  its  growth,  1867- 
1900,  621. 

Canal,  Suez,  economic  effects  of  its  con¬ 
struction,  300-304. 

Carrying  trade,  on  the  ocean,  revolution 
of,  305-309;  on  the  land,  revolution  of, 
309-317. 

Champagne,  land  owners  in,  56. 

China,  308,  413,  415. 

Church,  revenue  of,  in  1875,  76. 

Clearing  houses  of  London  and  New  York, 
returns  of,  491. 

Coal,  difficulties  in  mining,  51;  industrial 
revolution  due  to,  54 ;  reduction  in  con- 


638 


INDEX. 


sumption  of,  by  ocean  steamers,  307; 
effect  of  machinery  on,  319 ;  use  of  an¬ 
thracite,  419 ;  increase  in  production  of, 
485;  wages  in  mining  of,  495;  produc¬ 
tion  of,  in  Canada,  621;  possession  of, 
by  the  South,  582. 

Cobden,  Richard,  and  the  Anti-Corn-Law 
League,  214;  on  the  corn  laws,  217,  232. 

Colbert,  manufactures  encouraged  by,  66, 
67. 

Colquhoun,  Mr.,  speech  of,  231. 

Collie,  Messrs,  failure  of,  356,  364. 

Colonies,  ancient  Greek  and  Roman,  3  ; 
Spanish,  4;  Portuguese,  5 ;  of  Holland, 
7;  of  France,  8;  rapid  progress  of  Eng¬ 
lish,  9,  26 ;  exclusive  companies  injuri¬ 
ous  to,  13;  the  trade  of  British,  how 
regulated,  14-26,  511-514;  the  different 
kinds  of  non-enumerated  commodities 
specified,  15;  enumerated  commodities, 
17 ;  restraints  upon  their  manufactures, 
20;  favored  by  Britain,  22;  except'as 
to  foreign  trade,  24;  little  credit  due  to 
European  policy  for  success  of,  28; 
their  chief  indebtedness,  men,  30;  Eng¬ 
lish  interference  with  trade  of  French, 
111-112. 

Commerce,  restraints  on  by  exclusive  com¬ 
panies,  13-14;  by  navigation  acts,  15, 
511;  French,  fettered  by  guilds,  65  ; 
effect  of  American  Non-intercourse  Act 
on,  121;  policy  of  France  towards,  under 
the  Restoration,  168;  of  Zollverein,  178— 
180, 189 ;  treaties  of,  198,  292-296 ;  effect 
of  Suez  Canal  on,  300-304  ;  improved 
transportation  and,  307,  309,  489;  con¬ 
dition  of  foreign,  an  economic  symptom, 
491  ;  of  Canada,  621. 

Commonable  Fields,  102. 

Contraband  of  war,  neutrals’  demand  re¬ 
specting,  109. 

Corn  laws,  object  of,  207  ;  of  1801,  207  ; 
of  1804,  209;  of  1816,  209;  of  1828,  213; 
new  law  of  1846,  231;  report  of  com¬ 
mittee  on,  208;  injurious  effects  of,  211 ; 
formation  of  Anti-Corn-Law  League,  214; 
Mr.  Villiers  on  the,  215  ;  Sir  Robert 
Peel’s  opinion  of,  219;  the  sliding  scale, 
220  ;  policy  of  Peel  towards,  230  ;  final 
measure  of  gradual  repeal,  231  ;  their 
relation  to  the  new  gold,  282. 

Corporations,  restrictions  on  trade,  im¬ 
posed  by,  65. 

Cotton,  early  manufacture  of,  34;  inven¬ 
tions  which  have  developed  the  manu¬ 
facture  of,  36-43;  the  factory  system 
illustrated  by  its  manufacture,  407 ; 
statistical  and  economical  comparison 


of  its  manufacture  in  Great  Britain  and 
the  United  States,  409-417;  the  extent 
of  its  production  an  economic  symptom, 
485 ;  American  manufacture  of,  628. 

Cotton-gin,  invented  by  Eli  Whitney,  405. 

Crises  and  revivals,  periodicity  of,  355,  357, 
373,  483,  509-510.  See  Depression. 

Crompton,  Samuel,  his  invention  of  the 
mule,  41. 


Dakota,  wheat  product  of,  320  ;  settle¬ 
ment  of,  392,  393,  397. 

Davy,  Sir  H.,  his  early  career,  52  ;  invents 
safety  lamp,  53. 

Decree,  Berlin,  Nov.  21,  1806,  116  ;  at 
Warsaw,  1807,  117  ;  Milan,  Dec.  17, 
1807,  118;  of  St.  Cloud,  Sept.  12,  1810, 
118  ;  of  Fontainebleau,  Oct.  19, 1810, 118. 

Deficit  of  1787,  80. 

Depression,  economic,  of  1873-1876,  355; 
universality  of,  356-358,  473  ;  a  cause, 
the  failure  of  foreign  investments,  358- 
364;  mildness  of  its  effects  in  the  United 
Kingdom,  364-368  ;  question  of  its  con¬ 
tinuance  discussed,  369-373;  existence 
of.  from  1873  to  1879,  proven  by  statistics 
and  economic  symptoms,  469-510;  fol¬ 
lowed  by  a  revival,  1879-1883,  similarly 
presented,  469-510;  and  renewed  depres¬ 
sion  of  1883-1885,  473-510. 

Dettes  publiques,  chap.  xv. ;  augmentation 
des,  depuis  1870,  450-452  ;  dcpenses  de 
la  guerre,  de  la  marine,  capital  nominal 
et  interets  des  dettes,  453  ;  conversion 
de  rentes,  454  ;  abaissement  du  taux 
depuis  1870,  359;  modes  d’emission, 
361;  repartition  des  fonds  publics,  462; 
negotiation  des  rentes  fran^aises  aux 
sources  etrangeres,  363  ;  revolution 
dconomique,  365. 

Discount,  rates  of,  in  1873,  356;  variations 
in,  an  economic  symptom,  496-497. 

Disturbances,  economic,  since  1873,  an  ex¬ 
planation  of,  321-322. 

Domingo,  St.,  French  colony  of,  9. 

Douanes,  legislation  affectant  les,  168 ;  les 
recettes  des,  du  zollverein,  202. 

Dudley,  Dud,  discovers  a  mode  of  smelt¬ 
ing  iron  with  coal,  50. 

Dutch  settlements  in  America,  slow  im¬ 
provement  of,  owing  to  government  of 
an  exclusive  company,  7. 

Duties,  modes  of  levying,  185-188. 

£chelle  mobile,  154. 

Edict  of  Stein,  see  Stein. 


INDEX . 


639 


Edicts  of  Hardenberg,  see  Havdenberg. 

Egypt,  cotton  of,  415. 

Electricity,  industrial  use  of,  325;  future 
effects  of,  509. 

Employment  of  labor,  changing  conditions 
of,  318-321,  323,  407;  advantages  of 
America  in  the,  417-428,  condition  of, 
an  economic  symptom,  503-505. 

England,  finances  of,  1793-1815,  chap.  vi. ; 
a  new  system  introduced  by  Mr.  Pitt  in 
1797,  126 ;  new  impost  called  the  triple 
assessment,  127;  income  tax  imposed 
and  repealed,  127-128;  explanation  of 
partial  prosperity  under  heavy  taxation, 
128-129 ;  inventions  rescued  England 
from  financial  ruin  caused  by  French 
war,  129-131 ;  amount  of  expenditure 
during  the  war  (1793-1815),  131 ;  quota¬ 
tions  from  Sir  John  Sinclair’s  work  on 
the  Revenue  containing  forebodings  of 
financial  distress,  132-133;  amount  of 
public  debt  at  successive  periods  from 
1736  to  1816,  132-133, 136 ;  tabular  state¬ 
ment  of  public  income  and  expenditure, 
1792-1849,  134;  amount  raised  on  loan, 
etc.,  135;  delusive  nature  of  the  sinking 
fund,  136-137,  142;  inconsistent  meas¬ 
ures  adopted,  dead  weight  annuity,  con¬ 
version  of  perpetual  into  terminable 
annuities,  139-142;  balances  of  income 
and  expenditure,  1792-1850,  143-144; 
excess  of  expenditure  over  income  dur¬ 
ing  the  period  of  war,  and  excess  of 
income  during  subsequent  peace,  144; 
316  years  of  peace  required  to  cancel 
debt  of  24  years  of  war,  144-146 ;  finances 
of,  1837-1887,  chap,  xviii,  511-532,  603. 

Europe,  colonial  policy  of,  1-28;  little  to 
boast  of,  28-29 ;  except  in  the  contribu¬ 
tion  of  men,  30 ;  the  army  in  her  revolu¬ 
tions,  83;  failure  of  rye  crop  in,  234; 
rise  of  prices  in,  due  to  new  gold,  255, 
257 ;  drain  of  silver  from,  to  the  East, 
275;  effect  of  Suez  Canal  on  the  com¬ 
merce  of,  302;  financial  crises  in,  357; 
rapid  advance  in  her  cotton  manufactures, 
407 ;  advantages  of  America  for  compe¬ 
tition  with,  417-427;  economic  changes 
in,  469-473,  508-510;  the  wealth  of,  474- 
477;  her  indebtedness,  450-468;  her  in¬ 
dustrial  evolution,  533-536,  591-596. 

Famines,  prevention  of,  313. 

Feudal  system,  the,  described,  57-68;  over¬ 
throw  of,  in  France,  84. 

Finances,  difficulties  of,  Louis  XVI.,  77-79; 
judicious  policy  of  Sir  Robert  Peel,  221- 


229.  See  England,  la  Restauration,  la 
France  sous  le  second  empire,  French 
Indemnity. 

Flanders,  small  proprietors  in,  56,  62. 

Flour,  displacement  of  labor  in  the  manu¬ 
facture  of,  320-321. 

Foville,  A.  de,  475,  493. 

France,  the  trade  of  her  colonies,  how  reg¬ 
ulated,  15;  the  government  of  the  colo¬ 
nies  conducted  with  moderation,  25;  the 
sugar  colonies  better  governed  than  those 
of  Britain,  26;  Huguenots  from,  settle 
in  England,  46 ;  rural  nobility  and  peas¬ 
ant  population  of,  55-63;  condition  of 
towns,  63;  of  trade,  65;  of  manufac¬ 
tures,  66;  decline  of  national  prosperity, 
68-70;  efforts  of  reform  under  Louis 
XVI.,  71;  resistance  of  privileged  classes, 
72;  the  budget,  75;  general  dissolution 
of  order,  82 ;  the  army,  83 ;  final  catas¬ 
trophe,  84;  permits  colonial  trade  to  neu¬ 
tral  ships,  111-115;  restrictions  on  this 
trade  by  English  orders  in  council,  116, 
117;  blockade  of  her  ports  by  England 
118;  la  Restauration,  148-169;  potato 
disease  appears  in,  234;  effects  of  new 
gold  in,  251;  sous  le  second  empire,  284- 
297 ;  payment  of  indemnity  by,  326-350 ; 
investments  of,  in  new  countries,  359 ;  in¬ 
crease  of  her  public  debt,  451 ;  sells  Lou¬ 
isiana  to  the  United  States,  382 ;  national 
wealth  of,  475;  invested  capital  of,  500; 
business  failures  in,  503 ;  recent  fluctua¬ 
tions  of  trade,  488,  490,  492,  509,  538. 

France,  la,  sous  le  second  empire,  chap.  xi. ; 
le  credit  foncier  et  le  credit  mobilier,  284; 
ardeur  de  la  speculation,  285 ;  la  crise  de 
1857  et  ses  suites,  286 ;  developpement  du 
credit,  287 ;  nouveau  systeme  de  conces¬ 
sion  des  chemins  de  fer,  287 ;  les  grandes 
compagnies,  288;  multiplications  des 
moyens  de  communication,  289;  progr£s 
du  commerce  exterieur,  290-291;  le  sdna- 
tus  consulte  du  25  dec.,  1852, 292 ;  mesures 
relatives  a  la  disette,  292;  premiers  de- 
grevements,  293 ;  exposition  de  1855,  293 ; 
projet  de  supprimer  les  prohibitions,  294; 
lettre  du  5  jan vier,  1 860 ;  le  traite  de  com¬ 
merce  avec  l’Angleterre,  295;  autres 
traitds,  296. 

Frederic  the  Great,  93. 

Frederic  William  III.,  edict  of  emancipa¬ 
tion,  95. 

Free  ships,  free  goods,  neutral  demands  of, 
109. 

Freight  rates,  reduction  of,  307,  309. 

French  Indemnity,  payment  of,  a  vast 
transaction,  326;  conditions  under  which 


640 


INDEX. 


payment  was  to  be  made,  329,  330  ;  gen¬ 
eral  process  of  payment,  331-332  ;  parti¬ 
cular  means  employed,  333-337  ;  bills 
how  obtainable  for,  338-340;  relation  of 
French  trade  to,  341 ;  movement  of 
precious  metals  an  element  in,  343-347  ; 
striking  facts  suggested  by,  348  ;  tri¬ 
umph  over  obstacles  in,  349-350,  appli¬ 
cation  of,  the  various  items  classified, 
350-353. 

French  Revolution,  the,  division  of  classes 
before,  55  ;  division  of  property,  56; 
feudal  system,  57,  61;  rural  nobility, 
58;  town  government,  64;  the  guilds, 
65  ;  restrictions  on  manufactures,  66  ; 
wealth  of  France  at  the  period  of,  68  ; 
in  manufactures,  68  ;  in  agriculture,  69  ; 
in  commerce,  70  ;  schemes  of  reform, 
71-75;  the  budget,  75-76;  inequality  in 
distribution  of  taxes,  77 ;  expenses  of 
the  court,  78 ;  the  army,  83  ;  the  ancient 
polity  destroyed,  84. 

Frome  adopts  the  cotton  manufacture,  35. 

Gallatin,  Albert,  report  of,  406,  624. 

Germany,  social  and  agrarian  changes  ef¬ 
fected  in,  by  Stein  and  Hardenberg,  86- 
108 ;  her  neutral  markets  glutted  during 
the  war  1793-1815,  110  ;  formation,  ob¬ 
jects,  and  administration,  of  the  Zollver- 
ein,  170-206  ;  effect  of  the  new  gold 
upon,  255,  257,  261 ;  payment  of  indem¬ 
nity  to,  by  France,  326-350  ;  application 
of  the  indemnity  by,  350-354;  financial 
depression  in,  in  1873,  356,  357,  361  ; 
the  change  in  her  monetary  system,  368; 
increase  of  her  public  debt  since  1870, 
451;  American  advantages  in  manufac¬ 
ture  over,  417-425;  national  wealth  of, 
475-476,  480;  recent  economic  progress, 
322,  483,  485,  488,  493-496,  500,  509; 
her  people  the  largest  element  in  recent 
American  immigration,  506.  L’essor  in- 
dustriel  de  l’allemagne,  chap,  xix,  533- 
545. 

Giffen,  Robert,  economic  investigations  of, 
355,  474,  493,  501,  506. 

Gladstone,  Mr.,  217. 

Gloucestershire,  dependent  on  the  woollen 
trade,  32;  Roman  iron  works  in,  50. 

Gold,  an  element  in  payment  of  French 
indemnity,  329,  333,  336,  343-346,  349; 
a  special  advance  of,  made  by  the  Bank 
of  France,  332,  334;  its  production  in 
British  Columbia  and  Nova  Scotia,  621. 
See  New  Gold. 

Grain,  variations  in  prices  of,  in  the 
17th  century,  315  ;  effect  of  improved 


transportation  on  prices  of,  314-317. 
See  Corn  Laws. 

Great  Britain,  progress  of  her  American 
colonies,  9-13;  the  trade  of  her  colonies, 
how  regulated,  14;  distinction  between 
enumerated  and  unenumerated  commodi¬ 
ties  explained,  15;  restrains  manufac¬ 
tures  in  America,  20;  privileges  granted 
to  her  colonies,  22;  constitutional  free¬ 
dom  of  her  colony  government,  24 ;  the 
sugar  colonies  worse  governed  than  those 
of  France,  26;  increase  in  her  trade  dur¬ 
ing  the  war,  1793-1815,  31;  introduction 
of  woollen  and  cotton  manufactures,  32- 
36 ;  encourages  manufacture  of  linen  in 
Ireland,  45  ;  lack  of  success  in  silk 
manufacture,  45-46  ;  her  great  inven¬ 
tions,  36-44,  47-53 ;  gave  her  wealth  and 
commercial  supremacy,  44,  53-54  ;  her 
laborers  contrasted  with  the  German, 
88 ;  trade  of  neutrals  opposed,  during 
war  with  France,  109, 115 ;  orders  in  coun¬ 
cil,  116-118 ;  their  abolition,  120-124  ; 
the  war  of  1812,  124;  finances  of,  1793- 
1815,  126-147 ;  tariff  of  the  Zollverein 
hostile  to,  172;  the  Zollverein  participates 
in  the  advantages  of,  183-184;  imports  of 
the  Zollverein  from,  194  ;  the  Corn  Laws 
1801-1849,  207-241;  their  abolition,  231- 
233;  repeal  of  the  navigation  laws,  239- 
241;  advance  in  general  prices  due  to 
the  new  gold,  252-253 ;  a  corrective  in¬ 
flow  of  silver  to  the  East,  256,  269,  276; 
her  use  of  credit,  252,  271-276  ;  com¬ 
mercial  treaty  with  France,  23  Jan  , 
1860,  295-296;  distribution  system  of, 
302  ;  tonnage  statistics  of,  305  ;  British 
wheat  market,  317  ;  growth  of  her  in¬ 
dustries,  323  ;  bills  on,  in  French  in¬ 
demnity,  335,  337  ;  liquidations  of,  1873- 
1876,  355-374 ;  statistical  and  economi¬ 
cal  comparison  of  cotton  manufactures 
in  United  States  and,  409-417,  425-427  ; 
consumption  of  iron  and  steel  by,  435 ; 
increase  of  blast-furnaces,  440;  expense 
of  her  army  aud  navy,  453  ;  growth  of 
her  national  wealth,  474  ;  cotton  indus¬ 
tries  of,  485-486 ;  postal  statistics  of, 
490  ;  foreign  trade  of,  492  ;  prices  of 
staple  commodities  in,  493-494;  wages 
of  her  coal  miners,  495  ;  invested  capital 
of,  499  ;  business  failures  in,  502  ;  emi¬ 
gration  from,  506;  increase  in  marriages, 
507  ;  her  navigation  acts,  607-610. 

Greek  colonies,  3. 

Guienne,  system  of  m^tairie  iq,  61  ;  pro¬ 
vincial  assemblies  introduced  into,  74. 

Guilds,  restrictions  imposed  by,  65-fi7  ; 


INDEX. 


641 


hereditary  possession  salable,  63  ;  at¬ 
tempt  to  abolish,  66. 


Hamilton,  Alexander,  Report  on  Manu¬ 
factures,  443,  622-623. 

Hanse  Towns,  117,  180,  194. 

Hardenberg,  agrarian  legislation  of,  in 
1811,  98  ;  consists  of  two  edicts,  99  ; 
rights  commuted  by  first  edict  of,  100; 
principles  of  indemnification,  101 ;  rules 
for  guidance  in  the  application  of  these 
principles,  102;  agricultural  reforms  of 
the  second  edict,  103-104  ;  restrictions 
in  edict  of  1807  removed,  104;  important 
passage  quoted  from,  104-106  ;  various 
measures  in,  106-108. 

Hargreaves,  John,  his  invention  of  the 
spinning-jenny,  38,  129. 

Henry  III.,  restrictions  on  trade  imposed 
by,  65. 

History,  place  in,  of  period  from  1860  to 
1885,  298 ;  summary  of  recent  economic, 
322-325,  469-473,  508-510. 

Holland,  114,  118,  119,  180,  194,  483,  497, 
507. 

Hours  of  labor,  reduction  in,  503-505. 

Human  race,  the,  increased  power  of, 
through  railroad  agencies,  310 ;  com¬ 
mercial  relations  establish  the  unity  of, 
471-472. 

Immigration,  American,  28-30,  238,  395, 
505-507,  588. 

Imports,  increase  of,  in  England,  1793— 
1815,  31  ;  restrictive  duties  on,  in  Eng¬ 
land,  46,  207-212;  in  France,  67,  148- 
169  ;  in  Germany,  185-191  ;  effects  of 
decrees  and  orders  in  council,  114,  116- 
121;  oscillations  in  receipts  of,  in  Ger¬ 
many,  1834-1859,  202;  removal  of  duties 
on,  in  England,  211-233;  reduction  of 
duties  on,  in  France,  294-297  ;  varia¬ 
tions  in,  an  economic  symptom,  487, 
491-492;  amount  of,  in  Canada,  621. 

Income  and  property  tax,  introduction  of, 
by  Sir  Robert  Peel,  in  1843,  224;  ex¬ 
empted,  in  England,  1845,  1875,  475; 
value  of  property  assessed  for,  in  Eng¬ 
land,  224,  474  ;  in  France,  475  ;  in  Ger¬ 
many,  476  ;  in  United  States,  478. 

Indemnity,  see  French  Indemnity. 

India,  cotton  manufacture  an  ancient  in¬ 
dustry  in,  34 ;  effects  of  new  gold 
upon,  252-258,  268-269  ;  due  chiefly  to 
her  absorption  of  silver,  272-276 ;  reduc¬ 
tion  in  length  of  voyage  to  and  from, 
by  Suez  Canal,  300-306. 


Industries,  see  Cotton,  Iron  and  Steel,  In¬ 
ventions,  Worlds’  Economic  Progress. 

Interest,  rates  of,  135,  453,  496-497. 

International  relations,  increase  and  im¬ 
portance  of,  469-473. 

Inventions,  John  Kay’s  fly-shuttle,  36; 
Robert  Kay’s  drop-box,  37;  John  Har- 
greave’s  spinning-jenny,  38;  Richard 
Arkwright’s  water-frame,  39  ;  Lewis 
Paul’s  revolving  cylinders,  40;  Samuel 
Crompton’s  mule,  41  ;  Edmund  Cart¬ 
wright’s  power-loom,  43;  James  Watt’s 
steam-engine,  49;  Dud  Dudley’s  smelt¬ 
ing  process,  50  ;  Humphrey  Davy’s 
safety-lamp,  53  ;  Eli  Whitney’s  cotton- 
gin,  405  ;  recent,  enumerated,  324-325; 
general  effects  of,  53-54,  131,  322-324, 
509-510. 

Ireland,  manufacture  of  linen  in,  45  ;  dis¬ 
tress  in,  233-236  ;  emigration  from, 
237-238. 

Iron,  its  early  use  in  Britain,  50  ;  the  im¬ 
petus  given  by  Dudley’s  smelting  pro¬ 
cess,  51 ;  effect  of  duties  on,  during  the 
Restoration,  160  ;  exports  of,  from  Zoll- 
verein,  200-201 ;  world’s  production  in 
1880,  445;  iron-ore  in  the  United  States, 
573-579,  583-584. 

Iron,  pig,  increase  in  world’s  product  1870- 
1883,  317;  in  England,  484;  in  the 
United  States,  569-572,  585. 

Iron  and  steel,  effect  of  cheapening  on 
railroad  construction,  318;  important 
uses  of,  435-447. 

Iron  industrv,  American,  chap.  xxi. 

Italy,  34,  303,  481,  483,  488,  490. 


Kay,  John,  his  invention  of  the  fly 
shuttle,  36. 

Kay,  Robert,  his  invention  of  the  drop- 
box,  37. 

Kendal,  dependent  on  the  woollen  indus¬ 
try,  32. 


Labor,  liberally  rewarded  in  the  colonies, 
1,  9  ;  restrictions  upon,  by  the  guilds, 
65-68  ;  rights  commuted  by  the  edict  of 
Hardenberg,  100  ;  demand  for,  can  only 
increase  with  increase  of  capital,  130- 
131  ;  decrease  of,  in  the  management  of 
vessels,  305  ;  displacement  of,  by  ma¬ 
chinery,  318  ;  in  cotton  mills  of  the 
United  States,  318,  415  ;  advantages 
possessed  in  America,  417-427  ;  cost  of, 
reduced  bj”  machinery,  428;  strikes  a 
symptom  of  its  condition,  504-505;  or- 


41 


642 


INDEX . 


ganization  of,  in  United  States  iron  in¬ 
dustry,  586-587. 

Laborers,  tenure  of,  in  British  American 
colonies,  10 ;  effects  of  the  feudal  system 
upon,  57-68;  abolition  of  “caste  in 
persons,”  by  Stein,  92,  94;  character  of 
German,  184;  of  British,  370-371;  of 
American,  416-421;  variations  in  the 
condition  of,  an  economic  symptom, 
503-504;  union  of,  employed  in  the 
United  States  iron  and  steel  industry, 
586-587. 

Lafayette,  Marquis  of,  his  American  ex¬ 
pedition,  73-74. 

Land,  quantity  of,  an  element  in  coloniza¬ 
tion,  3,  4,  9,  10;  classification  of,  before 
and  after  the  Revolution,  56-57;  “caste 
in  land”  abolished  by  Stein,  92,  94,  96; 
agrarian  legislation  of  Hardenberg,  98- 
107  ;  failure  of  crops,  1845-1846,  234- 
238;  effects  of  improved  transportation 
and  production,  212,  320-321 ;  westward 
progress  of  American  settlement,  375- 
399. 

Latin  Monetary  Union,  290. 

Lead,  Romans  obtaiued  from  Wales,  50. 

Levasseur,  E.,  writings  of,  251,  597. 

Licenses,  commercial,  number  of,  1802- 
1811,  (note)  120  ;  evils  of,  during  the 
blockade,  120-122. 

Linen  trade,  the,  its  history,  45. 

Loans,  amount  of  money  raised  by,  in 
England  (1801-1821),  135;  two  distinct 
methods  of  obtaining,  136-141  ;  extent 
of,  by  the  Bank  of  France  under  the 
Second  Empire,  285-287  ;  their  employ¬ 
ment  of,  for  payment  of  French  indem- 
nit3r,  331-332,  338-341  ;  conversion  of, 
454-459 ;  investments  in  public,  an 
economic  symptom,  498-500. 

London,  its  money  market  a  great  distribu¬ 
tor,  253  ;  and  equalizer,  358. 

Louis  XVI.,  character  of,  71  ;  abortive 
reforms  by,  72. 

Lowell,  Francis  C.,  establishes  first  com¬ 
plete  cotton  factory  at  Waltham,  407. 


Macclesfield,  transfer  of  silk  trade  from 
Spitalfields  to,  46. 

Machinery,  improvements  in  cotton,  36- 
44  ;  the  steam  engine,  49-50  ;  enact¬ 
ments  against,  prior  to  French  Revolu¬ 
tion,  66;  displacement  of  labor  by,  318- 
319,  415  ;  epoch  of  efficient,  321-325  ; 
laws  against  exportation  of,  by  England, 
404;  cotton,  introduced  into  America  by 
Samuel  Slater,  403-404 ;  Eli  Whitney’s 


cotton  gin  as  important  as  inventions  of 
English  cotton  manufacturing,  405  ;  Mr. 
Lowell  sets  up  improved  cotton,  406- 
407  ;  stoppage  of,  during  American  civil 
war,  414  ;  British  operatives,  370-372; 
American  operatives,  417-425  ;  cost  of 
labor,  reduced  by,  428  ;  advantages  of, 
430-434;  important  iron  products  due 
to,  435-440  ;  recent  advancement  in  iron 
and  steel,  441-449,  572-573,  580. 

Maltzahn,  Baron,  report  of,  to  Mr.  Can¬ 
ning,  185. 

Manchester,  its  early  prosperity  dependent 
on  wool,  32 ;  adopts  cotton  industry,  35. 

Mankind,  see  Human  Race. 

Manufactures,  British  restraints  on,  in 
North  America,  20 ;  fostered  by  Colbert, 
66-67 ;  the  protective  policy  of  the  Resto¬ 
ration,  148-169 ;  beneficial  effects  of  Sir 
Robert  Peel’s  policy,  224-226;  establish¬ 
ment  of,  by  the  Zollverein,  172,  181 ; 
growth  of  the  factory  system,  400-409; 
■American  progress  in,  622-636. 

Merchants,  the  government  of  a  company 
of,  the  worst  possible  for  a  country,  7. 

Metals,  precious,  the  movement  of,  an  ele¬ 
ment  in  the  payment  of  French  indem¬ 
nity,  343-347.  See  New  Gold. 

Mexico,  390. 

Milan  decree,  118. 

Mining,  coal,  51-53;  iron-ore,  529-534. 

Money,  effects  of  an  increased  supply  of, 
244-251,  256-257 ;  effects  of  a  credit  sys¬ 
tem,  251-252;  kinds  of,  used  in  pay¬ 
ment  of  French  indemnity,  330,  333- 
338,  340;  investments  in  credit  institu¬ 
tions,  498;  Canadian  savings,  621. 

Monopolies,  injurious  effects  of  colonial, 
7-8,  15-22;  the  guilds,  65-66;  the  ex¬ 
ample  of  England,  232. 


Nantes,  edict  of,  the  revocation  of,  46. 

Napoleon  I.,  Berlin  decree  of,  116;  Milan 
decree  of,  118;  decree  of  St.  Cloud  and 
of  Fontainebleau,  118. 

Nations,  increasing  relations  of,  469-473. 

Navigation  Acts,  English,  enumerated  and 
unenumerated  commodities  of,  15-22 ; 
repeal  of,  239-241  ;  leading  sections 
from  the,  607-610;  American,  important 
sections  of,  611-615. 

Necker,  appointed  minister,  74 ;  dismissed, 
75;  restored  to  office,  81. 

Neutrals,  historical  sketch  of  England’s 
policy  towards,  110-112  ;  evasion  of 
belligerent  rights  by,  113-115  ;  orders 
in  council  against,  116,  117,  118. 


INDEX. 


643 


Neutrality  armed,  principles  of,  109-110; 
advantages,  113-115. 

Newcomen,  the  inventor  of  a  steam  engine, 
48;  its  defects,  48-49. 

New  England,  the  colonial  law  of  inherit¬ 
ance,  10 ;  importance  of  its  fishery,  16  ; 
freedom  of  its  government,  25;  changes 
in  the  factory  population,  421  ;  advan¬ 
tages  of,  for  manufactures,  417-434  ; 
recent  output  in  Eastern  manufactures, 
584. 

Newfoundland,  308. 

New  Gold,  the,  chap,  x;  a  fall  in  value  of 
money  and  a  rise  of  general  prices, 
caused  by,  242-243  ;  the  rise  of  prices 
unequal  during  period  of  augmentation, 
244;  two-fold  process  by  which  the  in¬ 
creased  production  operates,  245-247  ; 
the  laws  which  govern  the  rise  of  prices, 
247-251 ;  the  influence  of  different  cur¬ 
rencies  upon  the  course  of  the  movement, 
251-257 ;  a  change  in  the  distribution 
rather  than  an  increase  in  the  amount 
of  wealth  from,  259  ;  a  loss  to  com¬ 
mercial  nations  produced  by,  260  ;  the 
order  and  effects  of  the  movement  upon 
different  nations,  260-275 ;  influences 
developed  by  the  movement  that  com¬ 
pensate  for  the  loss,  275-278  ;  the  un¬ 
equal  rise  of  prices  in  particular  countries 
during  the  movement,  278-281. 

Norwich,  the  original  seat  of  the  woollen 
trade,  32. 

Ocean  freights,  reduction  of,  due  to 
economy  in  consumption  of  coal  by  com¬ 
pound  engines,  307-308. 

Operatives,  the  character  of  German,  184; 
of  English,  370-372;  of  American,  417- 
425 ;  average  product  of,  at  different  pe¬ 
riods,  in  cotton  mills  of  the  United  States, 
318,  415. 

Orders  in  council,  of  May  16, 1806,  116;  of 
Jan.  7, 1807,  117;  of  Nov.  11,  1807,  117; 
of  April  26,  1809, 118 ;  Lord  Brougham 
on,  122-124;  declaration  by  the  Prince 
Regent  to  revoke,  124  ;  but  too  late  to 
prevent  the  war  of  1812,  124. 

Paper,  American  legal  tender,  ch.  xx. 

Paris,  trade  of,  in  the  18th  century,  64; 
its  mob  armed  against  the  ministry,  80; 
parliament  of,  demands  an  Assembly  of 
the  States  General,  81;  treaty  of,  not  the 
cause  of  American  industrial  indepen¬ 
dence,  401;  number  of  new  companies 
established  in,  1881-1884,  500. 


Peasantry,  French,  condition  of,  prior  to 
the  Revolution,  57-63;  their  emancipa¬ 
tion,  82-85;  German,  condition  of,  prior 
to  the  emancipating  edict  of  Stein,  87- 
88  ;  the  abolition  of  caste  in  persons  and 
serfdom,  92-96. 

Peel,  Sir  Robert,  administration  of,  217 ; 
his  policy  in  regard  to  the  corn  laws, 
219-221;  financial  policy  of,  221-225  ; 
commercial  policy  of,  225-229  ;  repeal 
of  the  corn  laws  by,  230-233. 

Petty,  Lord  Henry,  new  financial  depar¬ 
ture  by,  145-146. 

Picardy,  small  landed  proprietors  of,  62. 

Population,  movement  of,  an  economic 
symptom,  507-508.  See  Immigration, 
United  States  Census. 

Portugal,  colonies  of,  5;  in  16th  century  a 
great  naval  power,  6 ;  her  colonial 
government,  25. 

Postal  statistics,  economic  significance  of, 
490-491. 

Potato,  Ireland  and  the,  233-238. 

Prices,  low,  of  land  in  the  colonies,  7  ; 
colonial,  of  European  goods,  15  ;  com¬ 
parison  of,  of  bread  before  and  since 
1789,  69;  of  bread,  in  England  during 
the  war  (1793-1815),  130  ;  the  sliding 
scale  regulated  by,  of  wheat,  213,  219- 
222 ;  increase  in,  of  grain  owing  to  fail¬ 
ure  of  the  potato  crop,  236 ;  effect  of  the 
new  gold  on  general,  242-283;  effect  of 
railroads  and  steamships  on,  314-315; 
of  cotton,  in  relation  to  the  American 
civil  war,  414  ;  their  economic  signi¬ 
ficance,  492-494. 

Production,  in  European  colonies,  1-30; 
an  increase  of,  owing  to  the  great  inven¬ 
tions,  31,51,  53-54;  low  state  of,  in 
France  prior  to  the  Revolution,  55-68  ; 
hindered  in  Prussia  by  the  caste  system, 
94;  effects  of  the  protective  system  upon, 
of  iron  during  the  Restoration,  160  ; 
improved  conditions  of,  in  the  Zollverein, 
184-185;  the  lessened  cost  and  increased 
amount  of,  owing  to  recent  improve¬ 
ments,  317-320;  comparison  of  cotton, 
in  1860  and  1880,  415 ;  the  world’s,  of  iron 
and  steel  in  1880,  445;  the  economic 
significance  of  variations  in  the  world’s, 
1870-1885,  484-486;  of  coal  and  gold 
in  Canada,  621 ;  of  iron  and  steel  in  the 
United  States,  1880-1900,  630. 

Production  and  distribution,  average  sav¬ 
ing  in  time  and  labor  of,  in  recent  years, 
298;  new  conditions  of,  298-325. 

Prussia,  see  Germany,  Stein,  Hardenberg, 
Zollverein. 


C44 


INDEX. 


Purchasing  power,  in  France,  69;  in  Eng¬ 
land,  130 ;  in  America,  416. 

Quito,  4. 

Railroad  construction,  recent  reduction 
in  the  cost  of,  312,  318  ;  extent  of,  an 
economic  symptom,  489-490;  extensive 
influence  of  American,  and  transporta¬ 
tion,  578-579. 

Railways,  introduction  of,  in  Germany, 
183  ;  extension  of,  in  France,  287-289  ; 
average  freight  charges  of  American, 
309-310;  economic  effects  of,  311-315  ; 
German  acquisition  of,  in  Alsace-Lor¬ 
raine,  330-331;  investments  by  Germany 
of  French  indemnity  in,  351;  speculation 
in,  by  new  countries,  360;  comparative 
mileage  in  1881  of,  in  the  United  States 
and  other  countries,  435  ;  the  world’s 
mileage,  in  1889,  310;  increase  in  Cana¬ 
dian  mileage,  1868-1900,  621. 

Reciprocity  of  foreign  countries,  speech  of 
Sir  Robert  Peel  on,  227-229;  benefits  of, 
469-473. 

Restauration,  la,  politique  commerciale  de, 
chap.  vii. ;  de  l’esprit  des  lois  douani- 
6res,  148;  ordonnance  du  23  avril,  1814, 
149  ;  1’administration  et  la  Chambre, 
149;  reclamations  contre  l’ordonnance, 
150;  droits  sur  les  fers,  150  ;  loi  du  17 
ddcembre,  1814, 151 ;  rapport  de  Magnie- 
Grandprez,  152;  loi  du  28  avril,  1816, 
152;  loi  du  27  mars,  1817, 153;  le  transit 
d’ Alsace  retabli,  154;  protestations  des 
ports  de  mer,  154  ;  loi  de  1819  sur 
l’echelle  mobile,  154  ;  loi  de  1821,  155  ; 
ses  consdquences,  156 ;  reclamations  pro- 
tectionistes,  156  ;  loi  de  1820,  157  ;  loi 
du  27  juillet,  1822,  157;  rapport  de 
Bourienne,  158  ;  les  sucres,  159  ;  les 
bestiaux,  160;  les  fers,  160;  premieres 
reclamations  des  manufacturiers  contre 
le  systeme,  160 ;  pretentions  de  la  droite, 
161;  profession  de  foi  du  Baron  Saint- 
Cricq,  161;  loi  du  17  mai,  1826,  163; 
attitude  du  gouvernement,  163;  difficultes 
du  systeme,  164;  traites  de  commerce, 
165  ;  les  etudes  economiques,  165;  J.  B. 
Say  et  la  theorie  des  debouches,  165; 
projet  de  loi  modern  du  ministere  Mar- 
tignac,  167;  caractere  du  systeme  pro- 
tecteur,  168 ;  de  la  faveur  dont  il  jouis- 
sait  en  Europe,  169. 

Revenue,  public,  and  expenditure,  before 
the  Revolution,  in  France,  75-80;  from 
1792  to  1849  in  England,  134,  143-144  ; 
1861-1884  in  the  United  States,  616- 


620;  1868-1900  in  Canada,  621;  1837- 
1885  in  England,  511-532. 

Revolution,  economic,  due  to  inventions, 
31,  53-54,  298,  324-325,  405,  415,  509; 
social  and  political,  see  French  Revo¬ 
lution,  Stein. 

Roebuck,  Dr.,  associated  with  James  Watt, 
49. 

Romans,  the  advance  of  the  Roman  slower 
than  of  the  Greek  colonies,  3. 

Rule,  of  1756,  meaning  of,  111;  relaxation 
of,  112;  of  1798,  neutral  complaints  of, 
112. 

Russell,  Lord  John,  advocates  a  fixed 
duty,  221;  fails  to  form  a  cabinet,  231. 

Russia,  reprisals  against,  110;  prohibitory 
tariff  of,  193  ;  grain  harvest  of,  1888, 
316;  increase  in  public  debt  since  1870, 
451 ;  restrictions  upon  its  goods  in  the 
English  Navigation  Acts,  608. 


Sailing-vessels,  decrease  in  number  and 
total  tonnage  of,  300,  308. 

Savings  banks  of  Canada,  525. 

Say,  M.  L£on,  Report  of,  discussed,  326- 
350. 

Scheele,  discovers  the  bleaching  properties 
of  oxvmuriatic  acid,  43. 

Schon,  Theodor  v.,  his  opinion  of  the 
edict  of  emancipation,  87,  95. 

Seal  fishery  of  Newfoundland,  changes  in, 
308. 

Search,  right  of,  neutral  demands,  109. 

Securities,  government,  investments  in,  an 
economic  symptom,  498-499. 

Serfdom,  abolition  of,  in  France,  84  ;  in 
Germany,  94. 

Shipping,  increased  efficiency  of,  300-309 ; 
encouragement  to  American,  615*;  amount 
of  Canadian,  621. 

Si£cle,  le  xixe,  chap.  xxii. 

Silk  trade,  the,  establishment  in  England  by 
the  Huguenots,  46;  American,  629. 

Silver,  the  drain  of,  to  the  East,  275-276. 

Sinclair,  Sir  John,  quotations  from  his 
work  on  the  public  revenue,  132-133. 

Slater,  Samuel,  erects  first  cotton  factory 
with  machinery  after  English  models  in 
America,  403. 

Socialism,  recent  phases  of,  505. 

Soetbeer,  Dr.,  statistics  of,  476. 

Southern  States,  the,  estimated  loss  to,  by 
the  civil  war,  617;  the  rate  of  increase 
of  their  population  an  important  factor  in 
the  census,  396,  399;  recent  development 
of  the  iron  industry  in,  582-585. 

Spain,  the  colonies  of,  4;  her  assertion  of 


INDEX . 


645 


an  exclusive  claim  to  all  America,  6; 
policy  of  her  trade  with  the  colonies, 
14 ;  cotton  introduced  by  the  Moors  into, 
34;  reprisals  against,  in  1805,  110  ;  aug¬ 
mentation  of  debt  since  1870,451;  con¬ 
version  of  its  loan  to  Cuba,  456. 

Speculation,  see  Crises. 

Spices,  513. 

Spindles,  John  Hargreaves  the  first  to 
make  use  of  a  number  of,  38 ;  total  num¬ 
ber  of,  operated  in  1880,  in  the  cotton 
manufacture  of  the  United  States,  414. 

States-General,  demanded,  80;  meeting  of, 
fixed,  81. 

Steam  engine,  invention  of,  48-50;  effects 
of,  upon  the  productive  energies  of  Great 
Britain,  129-131  ;  economic  value  of 
recent  improvements  in,  307. 

Steamers,  ocean,  displace  sailing  vessels, 
300-308 ;  their  increased  efficiency,  305- 
308. 

Steel,  Bessemer,  value  of  discovery  of, 
312;  substitution  of,  in  place  of  iron, 
312-313;  prompt  introduction  of,  rails 
in  America,  442;  the  United  States  in 
advance  of  other  nations  in  the  use  of 
(1880),  447,  448;  remarkable  increase  in 
its  use  in  the  United  States,  572-576, 
624.  See  Iron  and  Steel. 

Stein,  the  emancipating  edict  of,  decreed 
in  1807,  86 ;  his  own  account  of  the  edict, 
86;  Schon’s  view  of,  87;  its  threefold 
character,  88;  modern  peasant  proprie¬ 
torship  not  included  in,  89;  a  description 
of,  in  detail,  90-95 ;  text  of,  95-97. 

Stock,  amount  and  description  of,  created 
in  England  from  1801  to  1821, 135 ;  com¬ 
parison  of  methods  of  funding  debt  in, 
in  3  and  in  5  per  cent  annuities,  137-139. 

Strikes,  economic  significance  of,  504-505. 

Suez  Canal,  economic  effect  of  its  construc¬ 
tion,  300-304. 

Sugar,  originally  an  “enumerated”  com¬ 
modity,  16  ;  manufacture  of  refined, 
discouraged  in  British  colonies,  20,  26; 
increased  consumption  of,  in  1880  in  the 
United  States,  487. 

Suicides,  variations  in  the  number  of,  an 
economic  symptom,  508. 

Tariff,  protective,  levied  during  the 
Restoration,  148-169;  nature  of,  in  the 
Zollverein,  185-193  ;  prohibitory,  in 
Russia,  Poland,  and  Austria,  193;  adop¬ 
tion  of  free  trade  by  England,  207-233. 
See  Imports. 

Taxation,  under  Louis  XVI.,  76;  indirect, 
formerly  preferred  to  direct,  by  British 


governments,  127 ;  a  common  system  of, 
introduced  by  the  Zollverein,  178 ;  valu¬ 
ation  of  property  for,  in  the  United 
States,  478. 

Tea,  increased  importation  of,  in  1880  in 
the  United  States  and  France,  487,  488. 

Telegraph,  extent  of  the  electric  system, 
289-290,  310  ;  influence  of,  on  the  con¬ 
ditions  of  commerce,  302,  471 ;  statistics 
of  its  use,  a  symptom  of  economic  pro¬ 
gress,  490-491. 

Textile  manufactures,  early  history  of,  in 
England,  32-38 ;  importance  of  the  great 
inventions  to,  38-49,  53-54;  restrictions 
upon,  prior  to  1789,  in  France,  66-67 ; 
progress  of,  in  Germany,  184-185;  de¬ 
velopment  of  the  factory  system  in  the 
United  States,  400-408;  nature  and  ex¬ 
tent  of  American  cotton  manufactures, 
409-416  ;  advantages  of  the  United 
States  for  competition  in,  417-434 ; 
strikes  of  workmen  in,  505. 

Tilsit,  peace  of,  94. 

Tin,  obtained  by  the  Romans  from  Corn¬ 
wall,  50. 

Tobacco,  an  “  enumerated  ”  commodity, 
18;  low  duty  upon  colonial,  22;  impor¬ 
tation  of,  in  United  States,  France,  and 
Germany,  487,  488. 

Tolosan,  on  the  wealth  of  France,  68. 

Tonnage,  statistics  of  British,  305;  of  the 
world’s,  308,  490;  of  Canadian,  621. 

Towns,  magistracy  of,  before  the  Revolu¬ 
tion,  63-64;  remarkable  increase  in 
population  of  cities  in  Germany  and  the 
United  States,  540. 

Trade,  restrictions  upon  colonial,  13-24; 
increase  of,  in  England,  1793-1815,  31; 
extent  of,  in  France,  before  and  after  the 
Revolution,  70-71 ;  effect  of  orders  in 
council  upon,  119;  development  of  in¬ 
ternal,  of  the  Zollverein,  178-179;  its 
policy  towards  external,  187-195 ;  eman¬ 
cipation  of  English,  207-233;  influence 
of  the  new  gold  upon,  250-251,  259,  270- 
271,  279-280;  progress  of,  in  France, 
291;  changes  in,  through  the  opening  of 
the  Suez  Canal,  300-304;  effect  of  im¬ 
proved  transportation  on,  305-317  ;  of 
improved  production,  317-321 ;  charac¬ 
teristics  of  the  depression  in,  1873-1876, 
369 ;  comparison  of  English  and  United 
States  cotton,  409;  illustration  of  Ameri¬ 
can  advantage  for  competition  in  for¬ 
eign,  425-428  ;  statistics  of  Canadian, 
621.  See  World’s  Economic  Progress. 

Transportation,  early  conditions  of,  in 
France,  60;  improved  facilities  of,  in  the 


646 


INDEX. 


Zollverein,  178-179,  183-184;  multipli¬ 
cation  of  means  of,  in  France,  284,  287- 
289;  influence  of  Suez  Canal  on,  300- 
304 ;  revolution  in  the  carrying  trade  on 
the  ocean,  305-309;  on  the  land,  309- 
312;  effects  of  improved,  312-317 ;  eco¬ 
nomic  significance  of,  489-490,  578-579. 

Treaty,  of  Amiens,  110,  136;  at  Vienna, 
124;  between  United  States  and  Great 
Britain,  in  1815,  125;  Anglo-French  com¬ 
mercial,  of  1860,295-296;  three  Franco- 
German  treaties  or  conventions  of  1871, 
329. 

Treaties  of  commerce,  of  the  Zollverein, 
198-201;  of  France,  under  the  Second 
Empire,  292-297 ;  series  of  international, 
470. 

Trianon,  tariff  of,  118. 

Turgot,  on  subdivision  of  land,  56 ;  guilds 
abolished  by,  65 ;  commercial  legislation, 
67;  measures  of  reform,  72;  dismissed, 
73. 


United  Kingdom,  see  Great  Britain. 

United  States,  the  colonial  progress,  9-25; 
advantages  from  neutral  position  of,  in 
the  French  and  English  war,  113-114; 
non-intercourse  act  by,  121;  the  war  of 
1812,  122-124  ;  peace  concluded,  125 ; 
trade  with  the  Zollverein,  187;  relief 
sent  to  Ireland,  235 ;  Irish  emigration  to, 
236-238 ;  effects  of  new  gold  in,  252,  254- 
257,  275-276;  influence  of  the  Suez  Canal 
on,  302;  reduction  on  ocean  freight  to 
foreign  countries,  308  ;  railroad  freight 
transportation  of,  310;  transfer  of  its 
western  wheat  crop,  317 ;  displacement 
of  muscular  labor  in  the  cotton  mills  of, 
318;  crisis  of  1873  in,  356,  359;  railway 
speculation  in,  360;  decline  of  English 
exports  to,  362;  low  prices  in,  363;  in¬ 
creased  capacity  for  production  and 
manufacture  of  iron,  370,  372  ;  early 
introduction  of  textile  machinery  in, 
400-405;  growth  of  the  factory  system, 
405-408;  statistical  comparison  of  cotton 
manufacture  of  Great  Britain  and,  409; 
character  of  the  cotton  fabrics  in  Eng¬ 
land  and,  410-413;  advantages  in  indus¬ 
trial  competition  over  Europe  of,  417- 
424;  ability  for  competition  in  foreign 
markets  of,  424-429 ;  improvements  in 
cotton  manufacture  by,  430-434;  con¬ 
sumption  of  iron  and  steel  in,  435,  630; 
the  various  uses  of  iron  and  steel  by, 
435-439,  579;  progress  of  the  iron  and 
steel  industries,  441-449,  568-590;  na¬ 


tional  wealth  of,  477-479;  consumption 
of  tea  and  coffee  in,  487 ;  revival  of 
trade  in  1880,  490,  492  ;  statistics  of 
failures  in,  502  ;  variations  in  the  de¬ 
mand  for  laborers,  1870-1885,  503-504; 
strikes  in,  505;  immigration  returns  of, 
506;  increase  of  marriages  in,  an  eco¬ 
nomic  symptom,  507;  important  sections 
from  navigation  acts  of,  611-615;  cost 
of  the  Civil  War,  616-618;  payment  of 
war  debt  by,  618-620;  production  of 
iron  ore  in  1890,  583-584;  of  pig  iron, 
584-585 ;  safety  of  the  legal  tender  paper 
of,  568-590;  iron  industry  in,  568-590; 
progress  of  manufactures  in,  622-636. 

United  States  Census,  of  1790,  375-381; 
of  1810,  381-383;  of  1820,  383-385;  of 
1830,  386-388;  of  1840,  388-389;  of 
1850, 390-391 ;  of  1860,  391-393  ;  of  1870, 
393-395;  of  1880,  395-399;  of  1890,  399; 
of  1900,  399. 


Versailles,  treaty  signed  at,  Jan.,  1871, 
329. 

Vessels,  economy  in  construction  and  man¬ 
agement  of,  305;  sailing,  disappearance 
of,  308. 

Vienna,  crisis  of  1873  begins  in,  356. 

Villainage,  abolition  of,  98. 

Villiers,  Mr.,  213,  215,  216,  221. 

Wages,  comparison  of,  in  the  18th  and 
19th  centuries  in  France,  68-69;  demand 
for  labor  can  only  increase  with  increase 
of  capital,  130  ;  necessarily  higher  in 
London  than  in  the  country,  130;  com¬ 
parison  of  weekly  wages  in  1790  and 
1800,  in  England,  130;  of  cotton-mill 
operatives,  in  Rhode  Island  in  1840  and 
1886,  318;  on  wheat  farms  in  the  United 
States  and  Prussia,  321 ;  of  English  work¬ 
men,  371 ;  of  women  in  cotton  mills  of 
Lowell,  415;  variations  in,  an  economic 
symptom,  494-496;  increase  in,  in  the 
iron  ore  mining  industry  of  the  United 
States  585. 

War,  cost  of  French,  to  England  1793- 
1815,  124,  131;  cost  of  her  American 
war,  133-134;  method  of  payment,  136- 
147 ;  cost  of  the  American  civil,  616— 
618;  the  payment  of  the  war  debt,  618— 
620. 

Watt,  James,  his  invention  of  the  steam 
engine,  48-49. 

Wealth,  increase  of,  caused  by  the  great 


INDEX. 


647 


inventions,  31,  44;  estimate  of,  in  France, 
68-71 ;  public  income  and  expenditure 
of  the  United  Kingdom  from  1792-1849, 
134;  financial  policy  of  Sir  Robert  Peel, 
221-229;  change  in  distribution  rather 
than  in  the  increase  of,  from  the  new 
gold,  259  ;  cost  of  Franco-German  war  to 
France,  327-328;  result  of  the  war  on 
German  finance,  351;  increase  in  na¬ 
tional,  an  evidence  of  economic  pro¬ 
gress,  474;  in  Great  Britain,  474;  in 
France,  475;  in  Germany,  476;  in  Aus¬ 
tria,  476;  in  the  United  States,  477;  cost 
of  the  American  Civil  War,  616-618; 
payment  of  the  war  debt,  618-620;  Ca¬ 
nadian,  621. 

West  Indies,  the  remoteness  of,  greatly  in 
favor  of  its  European  colonies,  4;  the 
sugar  colonies  of  France  better  governed 
than  those  of  Britain,  26 ;  trade  of,  with 
Europe  carried  on  by  neutrals  during 
the  war,  1793-1815,  111-114. 

Wheat,  price  of,  in  England  in  1801,  207 ; 
in  1804,  208;  at  the  conclusion  of  the 
French  war,  in  1815,  209;  the  sliding 
scale  of  1829  regulated  by  the  price  of, 
213  ;  increase  in  price  of,  owing  to  the 
failure  of  the  potato  crop  in  Ireland, 
236  ;  momentous  consequences  of  im¬ 
proved  conditions  of  production  and  dis¬ 
tribution  in  the  instance  of,  313-317, 
320-321. 

Whitmore,  Mr.,  his  opinion  of  the  corn 
laws,  211. 

Whitney,  Eli,  invention  of  the  cotton  gin 
by,  405. 

Woollen  industty,  the  most  ancient  and 
important  in  Great  Britain,  32;  meas¬ 
ures  taken  for  its  promotion,  32-33; 
enactments  against  the  exportation  of 
the  machinery,  400-401 ;  American,  628. 

Work,  reduction  in  the  hours  of,  a  reason 
for  strikes,  504. 

Workingmen,  character  of  the  German, 
184;  condition  of  the  English,  371;  ad¬ 
vantages  of  the  American,  417-425. 

World’s  economic  progress,  the,  1873- 
1885,  chap.  xvii. ;  rapidity  of,  in  recent 
years,  469-473;  increase  in  national 
wealth,  an  evidence  of,  474;  in  Great 
Britain,  474;  in  France,  475;  in  Ger¬ 


many,  476;  in  Austria,  476;  in  the 
United  States,  477;  causes  of,  479-481; 
symptomatic  method  of  estimating,  dur¬ 
ing  a  fixed  period,  481-482;  primary 
symptoms  of,  483;  extent  of  production, 
483-486;  extent  of  consumption,  486- 
489;  changes  in  transportation,  489- 
490;  state  of  the  money  market,  491; 
foreign  trade,  492;  secondary  symptoms 
of,  492;  variation  in  prices,  492-494; 
in  wages,  494-496;  rate  of  discount, 

496- 497 ;  investments  and  dividends, 

497- 501  ;  bankruptcies  and  failures,  502; 
reflective  symptoms  of,  503;  condition 
of  the  working  classes,  503;  strikes,  504; 
immigration  and  emigration,  505-506; 
relative  frequency  of  births,  deaths,  and 
marriages,  507-508;  the  future,  509- 
510,  606. 


Young,  Arthur,  travels  in  France  of,  56, 
59,  62,  556. 


Zollvekein,  the,  motives  for  its  forma¬ 
tion,  170;  sentiment  of  national  unity 
created  by,  171;  the  union  not  due  to 
commercial  hostility  towards  other 
States,  172-173;  the  various  treaties 
which  preceded  the  final  league,  174- 
176;  its  extent  and  population,  177; 
objects  of,  178;  results  from,  179;  three 
desiderata  of,  180;  future  influences  of, 
181;  its  facilities  for  inland  trade,  182- 
183;  special  advantages  possessed  by, 
184;  tariffs  of,  185-193. 

Zollverein,  le,  historique  de  cette  associa¬ 
tion,  196;  population  des  £tats  associes 
en  1861,  198 ;  trails  de  commerce  avec 
les  principaux  pays  du  monde,  198; 
valeur  de  son  commerce  de  1835-1858, 
199;  principaux  produits  importes  et 
exports  en  1834,  1844  et  1857,  200; 
commerce  avec  la  France  de  1847-1858, 
201;  recettes  des  douanes  de  1834- 
1859,  202;  recettes  en  1858  et  1859 
classes  d’npres  les  fitats  de  l’Union, 
203;  partage  de  la  recette  entre  les 
divers  £tats,  203;  navigation,  204;  avan- 
tages  du  Zollverein,  205. 


■ 


» 


DATE  DUE 


APR  3  0 

998 

UNIVERSITY  PRODUCTS,  INC.  #859-5503 


BOSTON  COLLEGE 


BOSTON  DtJUISI  SCWOOf 
BUSINESS  ADMiN 


HC51 

R185 

4963 

v  * 

Author  Rand,  Benjamin 

Title 

Selections  illustrating  econ 

BOSTON  COLLEGE 

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